December storm
s which devastated swathes of Britain are expected to result in £500m-£700m insurance payouts for the commercial property industry, according to PwC.
The total insurance loss from Storms Desmond, Frank and Eva, which damaged thousands of homes and businesses, could be as much as £1.4bn, with PwC warning it could rise as flooding continues.
The cost represents a larger proportional hit for the commercial property industry than previous storms in 2007 and 2009, partly because this time there was more damage to cities, according to Mohammad Khan, general insurance leader at PwC.
In Leeds, roads became rivers as the River Aire burst its banks, flooding land and property along Kirkstall Road including Land Securities’ Cardigan Fields leisure complex, which hosts a nine-screen Vue Cinema.
CEG said areas prepared for its £400m Kirkstall Forge mixed-use redevelopment on the edge of the river were not affected and that measures were in place to mitigate against future floods.
Khan estimated insurance premiums could rise by up to 500% for small businesses that have been flooded repeatedly, although he said it was too early to make an accurate prediction.
He said premiums for property unaffected by the flooding might increase but “not in that order of magnitude”, and advised owners to shop around to get the best deal.
The scale of the damage has prompted renewed calls for the government home insurance initiative Flood Re to be extended to the commercial property industry. Due to come into force in April, Flood Re will limit the cost of insurance premiums for homeowners in high-risk areas.
Ian Fletcher, head of policy at the British Property Federation, said the BPF had campaigned for Flood Re to be extended to leaseholders, private landlords and small businesses, but was told by ministers that they “did not see a systemic problem” which required those groups to be offered extra protection.
He said more government investment in flood defences was needed to protect commercial property.
