Scheme anticipates that households in flood-prone parts of the country will pay less for flood cover insurance from January 2019
Flood Re has announced that it will reduce the reinsurance premiums it charges to insurers from 1st January 2019.
The decision is anticipated to reduce the costs of flood insurance cover for people most at risk of flooding in the UK.
Premiums charged by Flood Re to insurers are set based on Council Tax bands, and from the start of 2019 they will be reduced by 12.5% for buildings and 33% for contents. This will mean a reduction of between £44 and £112 for a combined building and contents policy.
Flood Re consulted with seven major insurers – responsible for two-thirds of Flood Re’s overall distribution and analysing more than 6.9 million test records – to assess the effects of reducing reinsurance premium charges. While the end-price charged to consumers is decided by individual insurers, this analysis anticipated that a reduction in reinsurance premiums would result in reduced prices for consumers.
The analysis also found that a significantly greater percentage reduction was appropriate for contents premiums compared to buildings.
Today’s announcement follows Flood Re’s decision not to increase premiums in April 2018 in line with inflation.
Andy Bord, Chief Executive of Flood Re, said: “Our purpose is to make flood cover as part of home insurance more affordable and available. I am delighted today to announce that we will help to make flood cover even more affordable for those most at risk of flooding by reducing our premiums.”
“Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future.”
“Flood Re was encouraged to note the results of our consultation, confirmed across the market, that our premium reductions will result in lower premiums for consumers.”
“Therefore, if some households in flood-prone parts of the country have previously not take out home insurance for cost reasons, we hope that this move may encourage them to obtain cover. Consumers should always shop around to get the right deal for them.”