Rising tithes - How taking a closer look at flood can save your client money

How-taking-a closer-look-at-flood-can-save-your-client-money

Authored by Brent Jackson, Commercial Director, FloodFlash

We've witnessed dramatic changes in commercial property premiums. Here we explore what is driving the change for flood coverage and what you can do when quotes come in higher than expected.

Why do premium increases happen?

Premium loading is a broad term that indicates price increases based on various factors. Life and health insurance plans provide good examples. When the health status of the policyholder changes the insurer adjusts the price to reflect the risk factors (see over).

Insurers' view of flood risk is based on many factors. Climate change, urbanisation and changing weather patterns all contribute to flood models which change and evolve over time. As the models change - prices go up and down accordingly. Recent Met Office data has consistently indicated the increasing frequency of extreme weather - which is factored into flood premiums.

Even if a property’s flood risk is not judged to have changed, premiums can still increase. Increases in the sum insured can result in changes to the rating calculation. This might be the result of clients acquiring high value equipment or increases in the business interruption values needed.

Current factors affecting commercial premiums

The main reason we have observed for flood premium increases this year is the increase in rebuild costs. The Royal Institute of Chartered Surveyors suggest that material costs may increase as much as 17.6% this year. Insurers need to consider these rising costs, as they will result in far higher claim values.

Signs that client flood premiums are high

If your clients are facing rapidly increasing premiums, then they may be experiencing premium loading. Brokers we speak to also observe rising excesses and a decreasing number of insurers willing to quote on the risk. Often, it’s a combination of factors that indicate premium loading.

How FloodFlash can help

It can be useful to ask the underwriter what the price would be without flood.

Some may refuse unless there is a guarantee of flood cover in place – that's where FloodFlash comes in. Due to the simplicity of parametric insurance, a FloodFlash policy is often cheaper than a loaded premium from the primary insurer. Using FloodFlash to fill the exposure can save clients thousands of pounds.

Case Study: Residential management company in Reading

After a rebuild cost assessment prompted significant increases in their sums insured, a Reading- based residential management company was facing unaffordable premiums.

With only one broker willing to provide cover including flood, the broker considered the cost of cover excluding flood. They had never flooded before, but due to their proximity to a major river, they were at risk from river flooding. Excluding flood, the premium fell significantly, with more insurers offering terms. However, the management company still wanted to have protection in the event of a flood. FloodFlash proved the perfect fit.

Traditional flood insurance considers the complete sums insured, meaning when the sums insured rise, the premium will rise too. However, this doesn't consider the reality of how a flood may impact a property. In this case, the group of properties had no accommodation on the ground floor and had a step leading to the entrance. The company considered the cover they would need at different scales of flooding, from replacing the carpets in the entrance hall to providing alternative accommodation to their residents. They landed on cover that they were happy with and saved over 30% on their total premium.

If you are an insurance broker and would like to contact FloodFlash to find out more about their proposition, CLICK HERE, leave a message and youTalk-insurance will pass your enquiry on

15 September 2022

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About FloodFlash

FloodFlash is a new type of rapid-payout flood insurance. It uses the latest data modelling and connected tech to bring parametric insurance to the mass market for the first time. The result is fast, easy and flexible cover that pays claims within days of a flood.

FloodFlash is parametric or `event-based` insurance. When buying the cover, the client chooses the depth of flooding they wish to insure against and how much they’d receive when that flood happens. When the FloodFlash sensor installed at the property detects flood water at the selected depth, the claim is paid in full. No waiting. No haggling.

FloodFlash rapid-payouts were put to the test in February 2020 when Storm Ciara swept across the UK. Claims related to the storm were paid in full within a single day. That speed of claims payment remains the fastest and best proof of mass-market parametric insurance to date gaining acclaim at industry awards and recognition from The Times, The Telegraph and the BBC.

FloodFlash operates across Britain, is headquartered in London. Floodflash is a registered coverholder at Lloyd`s of London and is authorised and regulated by the Financial Conduct Authority.