Bermuda waterfront properties that are too prone to flooding and storm damage could be turned down for insurance in the future, according to one of the Island's main insurance companies, BF&M.

Low lying homes and businesses on both the South Shore, Great Sound and North Shore could find themselves cut off from the insurance company if their homes are deemed too risky to insure.

“Properties that are viewed as being prone to inevitable damage, will, of necessity, be declined cover,” said BF&M in its annual report. The report said that wave action and inundation from the sea along the South Shore affected the coast line and the properties close to seashore, causing extensive damage. “We have not seen such extensive damage before and your company is reviewing its approach to insuring high-risk properties,” it said.

The company said it would follow the guidelines and advice laid out in the Government sponsored report by Smith Warner International which assessed coastal damage from Fabian.

It added: “We will follow their recommendations closely, particularly with regard to setbacks and proper structural designs to withstand wave forces.”

The report also said that as Fabian approached from the south, but other areas would also need to be reviewed and assessed for risk. “Our conclusion is that low-lying properties in areas other than the south side will also need to be reviewed,” said the report.

When contacted by The Royal Gazette, Glenn Titterton, president and chief executive officer of BF&M said that the review would not mean a blanket exclusion to all low lying properties as has happened in areas in the US following floods and hurricanes.

He said that due to a shortage of land in Bermuda, residents had taken to building in low-lying areas which were known to be prone to flooding or storm surges. “People are building in very low lying areas where storm damage is almost inevitable,” he said. “So why would an insurance company accept that kind of risk?”

He said what would happen was that there could everything from minor changes to cover, to those whose property was in the most severe danger areas facing either no cover or huge bills to get insurance. There could also be limitations on what was covered by insurance, with choices ranging from extra charges to discounts for sea walls and if buildings have been built correctly.

Mr. Titterton pointed to the PXRE building on Pitts Bay Road, that has been built by a BF&M subsidiary, as a building that has taken many precautions to be as surge-proof as possible.

The first level is built with a four foot wall to break waves, and all the windows are four feet above ground level with a false wall and pumps installed. The electricity even comes in from above to minimise risks.

And he said that these kinds of construction techniques would have to be looked at more and more to allow houses to be built and safe in low-lying areas. He also said that older houses were typically built higher up, and were not so prone to damage.

“Should they pay the same premium as someone who has built in a low lying area?”

Mr. Titterton said he could not put a number on the properties deemed to be at risk across the Island and said they would be following Government guidelines on what were the most prone areas.

“We know the risks, but sometimes we are still not taking the precautions,” said Mr. Titterton. “My guess is that people will have to do a lot more. They will have to find out the extent of the wave wash and build accordingly.”