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Flood insurance for UK property, both commercial and domestic, will change materially in 2013 and possibly sooner. This is the response by the UK insurance industry to the decision by the Government to reduce planned spending on flood defences. The underlying message is that insurers think the flood risk is getting worse.

The government cuts in planned spending on flood defences have important, potentially catastrophic implications for commercial property owners and managers. They can include:

- The probability of more frequent and possibly more severe flooding
- Limited or more expensive insurance or both
- Potential breach of contract for properties where insurance isn't available
- Reduction in availability of property loans
- Claims from neighbouring property owners affected by flood prevention measures

The United Kingdom is unusual; flood insurance is widely available for most domestic and commercial properties. This isn't the case elsewhere in Europe. But UK insurers fear that climate change will increase the number and possibly the severity of floods, and they have already seen claims increase by 200% in real terms during the last decade.

Read my full Flood Bulletin here (PDF)

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What if?

A serious flood affecting Central London would put all services under extreme pressure - possibly even to breaking point, since they are already so stretched, and businesses would suffer as a result. For instance, seven of the nine major rail terminals are situated in the area shown in the Environmental Agency flood map as at risk and numerous underground stations are in flood risk zones. Premises may be inaccessible, even if they aren't themselves flooded, or staff unable to get to work. The effect of the pre-Christmas snow demonstrates how stretched London's infrastructure is.

Two of the three emergency response hospitals, Guy's and St Thomas' are within yards of the Thames and numerous underground stations are in flood risk zones. It is not clear how well protected major public services are, but many individual buildings still have emergency back-up power generators, telecoms and critical support functions in the basement.