Flood Re, the flood re-insurance scheme developed by the insurance industry to help homeowners in need of insurance in flood risk areas, has today opened its doors for business.
Launching the scheme, Brendan McCafferty, Chief Executive of Flood Re said:
“We will be ready to accept policies in April and are working hard to ensure that as many insurers as possible are able to offer products to consumers. After launch, people in high flood risk areas should speak to their insurer and be prepared to shop around.”
“Consumers will continue to buy their policy from the insurer they choose and if they need to make a claim then they will do so directly with that company.
“The consumer will see no change in process but will have Flood Re in the background ensuring that flood insurance is affordable, even for the most vulnerable properties.”
Flood Re’s scope is private household insurance policies only, where it was accepted by the insurance industry and government that there was an emerging market failure to deliver affordable available flood insurance.
"Scheme will not incentivise further housebuilding in areas of high flood risk"
Flood Re will not cover businesses, which are excluded from scope as no market failure had been established. It will also not cover properties built after 1st January 2009 so that Flood Re does not incentivise further housebuilding in areas of high flood risk.
Flood Re’s purpose is to promote the availability and affordability of flood insurance – the scheme is directly accountable to Parliament and is funded from a levy on insurance companies.
The Government has been working more closely with insurers in the UK on the scheme to deliver a new way of dealing with and offering flood cover on home insurance through a not-for-profit scheme that is funded by insurers. Flood Re will be in place until 2039 and will:
- Enable homeowners to find affordable insurance if an eligible property is at risk of flooding
- Help tenants to find affordable contents insurance if they live in an eligible property
- Help local authorities and communities across the UK to be better prepared for flooding
- Create a ‘level playing field’ for UK insurers, which means they can still offer homeowners an affordable range of appropriate policies to those homes at risk of flooding.
The aim of the scheme is to enable insurers to provide insurance and maintain affordable pricing on their policies with support from Flood Re. A total of 17 insurance providers as follows are listed on the Flood Re website:
- Admiral
- Avantia (HomeProtect)
- Aviva Home Insurance
- Bank of Scotland
- Cherish Insurance Brokers
- Churchill
- Direct Line
- First Direct Home Insurance
- Halifax
- Hiscox Broker
- Legal & General
- HSBC Home Insurance
- Liverpool Victoria
- Lloyds Bank
- More Than
- Nationwide
- Privilege
The Flood Re website positions the organisation as “working behind the scenes” to take on the flood risk elements of home insurance.
The scheme operates by collecting an annual tax from every home insurer in the UK which then contributes £180 million to a fund each year that is centrally managed by Flood Re.
The insurer passes on the flood risk part of the policy to Flood Re which it then takes responsibility for - in the event of a valid claim, Flood Re will reimburse the insurer from the central Flood Re fund.
Flood Re said:
“With this support from us, insurers should be able to provide more competitive pricing on their policies. Over time, we estimate that Flood Re will benefit over 350,000 households by having access to those more affordable policies.”
Flood Re said it will continue to add the names of brands to the list as soon as they become able to provide insurance to householders which are likely to include the benefits of Flood Re.
Click here to visit the Flood Re website
Waterbriefing is media partner with the Institution of Civil Engineers keynote Flooding and Water Management Conference 2016 taking place in London on Thursday 30th June. Click here for more information about the conference.
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