Calder Valley businesses struggling to get insurance after floods

The meeting between Defra Minister Rory Stewart and the insurance sector comes after Calder Valley MP Craig Whittaker claimed communities will 'wither and die' if more isn't done to make sure damaged businesses can get cover.

Various businesses in Hebden Bridge, Mytholmroyd and Brighouse suffered severe damage in the Boxing Day floods.

In a debate in the House of Commons, the Conservative politician told Mr Stewart that the Government, as well as insurance companies, need to play a part in ensuring that excesses for small and medium sized businesses are not 'phenomenally unaffordable' in the future.

Mr Stewart will meet today with the British Insurance Brokers Association, Association of British Insurers and the Federation of Small Businesses and has promised to 'relentlessly and vigorously' assess the economic and social cost of failing to provide adequate cover.

MPs heard during the adjournment debate held on Monday how flood hit businesses, including a large manufacturing firm in the Calder Valley, are now at risk of closure as they can't meet the costs to remain open.

Only a joint partnership between insurance companies and the Government will ultimately solve the problem, Mr Whittaker claims, and he wants to see the successful Flood Re insurance scheme for domestic properties replicated for the businesses sector.

Mr Whittaker said: "The Calder Valley is made up of high-sided valleys, so there are few places for those businesses to relocate locally. If they move out of the Calder Valley, we will lose the job skill sets and the local communities will wither and die.

"Although I am encouraged by the words of the Prime Minister and his assurances that he is looking very closely at this issue, my experience leads me to believe that there are potentially hundreds of businesses in my constituency which are unable to access flood insurance."

He mentioned a climbing wall with 30,000 members that faces a huge clean-up bill and the businesses future hangs in the balance while staff work out if they can cope with soaring insurance costs. A high-end British furniture manufacturer in Mytholmroyd which employs 100 people is facing losses of £500,000 and has been told by insurance firms that it won't get flood cover in the future, and no protection for stock.

Giving a third example to the Government, he said the large manufacturing firm in the Calder Valley had been flooded on four separate occasions over the past decade before it was hit by destructive rising waters on Boxing Day.

Mr Whittaker said: "The business has been able to access flood insurance in the past, but has been told in no uncertain terms by its insurers that it will not receive flood cover in the future. Its enquiries of other insurers have been unsuccessful on account of the ridiculous terms and conditions that have been quoted.

"The difficulties in accessing insurance, and the losses incurred by being flooded so regularly, now mean that it is likely that this business will close, with the loss of 40 jobs."

He also rubbished a Defra report from July 2015 'Affordability and Availability of Flood Insurance: Findings from Research and Business' that has been used to argue by insurance companies that there is no problem with flood hit businesses getting insurance.

Businesses surveyed in the report only contain a small number in high flood-risk areas and that only 25 businesses were interviewed altogether casting doubt over the credibility of the evidence presented, argues Mr Whittaker.

He said: "The Association of British Insurers says that there is no evidence of businesses not being able to access flood insurance and cites Defra's own report, which I have highlighted to say there is no evidence."

Mr Stewart, who is MP for Penrith and the Border and flood envoy for Cumbria, said he will look again at the Defra report that has been used by companies to justify their approach to insuring flooded businesses.

He welcomed Mr Whittaker's 'serious forensic analysis' that 'tore the Defra report to pieces' and said he acknowledged that the 'insurance industry cannot be the complete answer'.

He said: "A total of 2686 businesses were surveyed, but I absolutely agree that the 25 on whom an in-depth survey was conducted was not a large enough number to be a decent sample.

"I give a commitment to my honourable Friend and to the House that we will, thorough the round table and over the weeks ahead, look in full, relentlessly and vigorously, at the costs, both economic and social involved in failing to provide adequate business insurance."

However he did point out that setting up a Flood Re scheme for businesses does involve considerable cost to communities that haven't been flooded through the subsidies they're asked to pay.

He said: "We need to answer some questions. First, how much subsidy - because there is an element of subsidy - do we wish to put into an individual valley?

"Secondly, what should balance be between the Government element of the subsidy and that provided by the insurance industry for businesses in non-flood affected areas?"