Flood insurance premiums rocket for Newton Stewart business owners

Victoria Street underwater on December 30, 2015
Victoria Street underwater on December 30, 2015

A businessman has warned that the Government and insurance industry must get affordable cover in place for flood risk businesses.

David Inglis, who owns Home Decor, says the aftermath of the flooding of the business heart of the town a year ago has resulted in his flood excess cover ballooning from £250 to £15,000.

He added that failure to provide affordable cover will see the ‘main street die’.

Residential homes have protection through the Government’s Flood RE scheme which caps the flood insurance element of home insurance premiums, but businesses do not.

Mr Inglis said: “This is a major issue for the town. It is far from getting back to normal as some politicians would have you believe. My premium has increased by 10 per cent, however the real sting in the tail is the flood excess which has now been added to the policy. This is coming in at £15,000 where last year the excess figure was £250. This has major implications for any property owner/renter on Victoria Street.

“If you cannot get or cannot afford to renew your flood cover then it will impact on sale/rental values on the main street and it follows that owners will lose tenants or will struggle to sell their properties thus stagnating the town’s shopping centre. If the main street dies then this will have a knock on effect on any property within the town.

“There is talk of some form of flood protection similar to the Flood RE scheme being introduced, but it is still a long way off if it will ever by introduced at all.”

Galloway’s MP Richard Arkless commented: “The Flood RE scheme does not currently apply to businesses because the Association of British Insurers (ABI) and the Government say it would be difficult to establish a standardised business insurance package given the complexity of each individual case. The British Insurance Brokers Association (BIBA) is currently looking into flood insurance for businesses but that is of no comfort to those facing a huge jump in the cost of premiums/excesses.

“I would like to see a similar scheme extended to businesses so that we can address the problem of trading with no insurance because of price issues or the scale of the excess quoted. I would encourage small business owners to shop around or use an insurance broker to find the best deal for them.”

But Mr Inglis replied: “With the greatest respect to Mr Arkless, small businesses don’t need to be told to “shop around” - they have been doing this for years. The fact is that commercial property owners in towns like Newton Stewart have proof that they cannot access affordable flood cover if any at all. If he needs to see this he can call on any of the shops in Newton Stewart and I’m sure they will show him their renewal notices.”

MSP Finlay Carson added: “I am disappointed that nearly a year on from the flooding in Newton Stewart that more support has not been offered to local businesses in terms of assistance with insurance.

“In some cases, business owners are being quoted excesses of £15,000 – a figure that would close local businesses on Victoria Street in the event of another flood.

“I wrote to both the Scottish and UK Governments asking them to consider introducing a scheme similar to Flood RE, which is currently only available to householders.

“Disappointingly, it appears that there are no plans to make such a scheme available, however it will be of some comfort to business owners that the British Insurance Brokers’ Association are planning to launch a commercial product that seeks to provide insurance to businesses at high flood risk.

“I will continue to take a close interest in the progress of this new product and have made enquiries about when it will be launched”.