Insurance and flood-risk – what can a farmer or landowner do to feel better protected and keep the premiums down?

The CLA’s Water Strategy: a vision for the water environment to 2030 not only presents some important recommendations to prevent and manage flooding, but reminds us all of the devastating impact of flooding on farms – and the implications for land managers looking to gain some insurance protection.
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Policy and Engagement Advisor, Emily Church has joined CLA Cymru bringing previous experience of the agricultural insurance industry.

Research carried out by Heriot-Watt University earlier this year, found that Wales could see flood events further increase by 25% by 2080. This is frightening considering the threat we’ve seen over the last 2 years, when Storms Dennis and Ciara (to name just two) – affected very large areas in the Severn and Wye catchments and others. The Met Office tell as that there have been 17 record-breaking rainfall months or seasons since 1910, nine of them since 2000. The extreme rainfall has led to a pattern of severe flooding. The 2015-16 winter floods were the worst on record.

According to the Association of British Insurers (ABI), I’ve found that insurance payouts to help UK-wide customers recover from the two 2020s storms above, was initially estimated to be towards £360m. However, the estimated total payout for specific flood claims came to approximately £214m, with commercial property flood claims making up £85m of the total amount.

With regards to the financial side of insurance claims due to flood or storm damage, unfortunately the excesses are usually high, generally starting as high as £500. However, in the scheme of things, flood and storm damage can generate claims in the tens or even hundreds of thousands of pounds region, especially when crops are involved. In this context, a £500 excess doesn’t seem excessive!

Ultimately, this does then increase the policyholder’s loss ratio, meaning a higher premium to face at the time of next renewal, thus meaning land and business-owners needing to look at ways in which to minimise the risk of flood and a flood-plan being one. Ditches and drainage channels should obviously be maintained. Other methods are to incorporate run off ponds, and soil conditioning by loosening it to improve porosity, and the use of low-ground-pressure tyres to reduce soil compaction when possible.

When it finally comes down to insurance protection, obviously landowners need to ensure they have the right amount of cover for their assets: home, other buildings, land, stock, crops, plant and machinery. If you’re not sure what’s covered in the context of flooding it’s vital to contact your insurer and find out. As we all know, floods can appear in a flash, so members need to find out if they’re covered or not before it’s too late. We must all bear in mind that insurers are always changing their covers and members need to be aware of exclusions, which would then mean they would foot the bill, which can evidently put people out of business or in serious debt.

Insurers' designation of land as liable to flooding can be a touchy subject

Emily Church

Farmers and land managers in areas often affected by flood are likely to have a flood plan but this, as-such, is not essential to insurers. They expect the land/business owner to be able to demonstrate that they have assessed and managed risks appropriately and taken appropriate action to reduce risk and associated impacts. Of course, insurers are particular about businesses that are classed to be in a flood risk area. The definition of this itself can be a touchy subject when vulnerable areas are identified by postcode, and do not take into account the gradient of the land. In the time I’ve been in the insurance business this was always a sore topic between business owners and insurers.

Land & business owners can get warnings by phone, email or text to alert them of a risk of flooding to the home or business. Flood Line is a free service that they can sign up to. For those who are situated in a flood risk area this is a must. However, it’s worth remembering that flood is highly disrespectful of boundaries – it’s best that landowners’ own flood plans to be compatible with neighbour’s and fit with a plan for the area, which is the responsibility of the local authority emergency plan department. On the day it happens the help of neighbours and local authority services will be the first port-of-call before a call to your insurance claims-line!

Flood line: 0345 988 1188 or online here.