Flood Re has announced proposals outlining how to encourage more properties across the UK to be made resilient to flooding.
Flood Re was established to promote the availability and affordability of household insurance for eligible homes and, over its lifetime, enable a transition to affordable risk-reflective pricing for household insurance for those at risk of flooding. Flood Re must formally review the Scheme at least every five years in what is called “the quinquennial review” (QQR).
Flood Re wants to work with insurers to “build back better” homes after a flood. It therefore proposes changes to the Scheme that would permit the payment of claims to include an additional amount for resilient or resistant repair, above and beyond the original damage.
Flood Re today also calls for the ability to reward those householders who proactively install flood resilience measures with discounted premiums on their home insurance policies, when they are ceded to the Scheme.
Taken together, the package of proposals will help incentivise the take-up of property level flood resilience measure by householders, support the insurance industry, encourage the growth of the resilience products sector and reduce the costs and disruption of future flooding when it occurs.
Flood Re’s assessment and recommendations have been sent to the Secretary of State for Environment, Food and Rural Affairs for review.
Flood Re also recently published its annual report for 2018/19. Highlights include:
- Milestone: Just under a quarter of a million properties have benefitted from the Scheme since its launch three years ago.
- More affordable: The Consumer Intelligence data also shows that four out of five householders with a previous flood claim saw price reductions of more than 50%.
- More competition: We now have 64 insurers ceding policies to the Scheme – equivalent to 94% of the home insurance market.
- A strong financial position: Profit before tax of £136m (£134m year prior), an increase in invested and liquid assets to £358m (2018: £257m) and a capital solvency ratio of 347% (2018: 425%).
Andy Bord, Chief Executive of Flood Re, said:
“Flood Re has already had a significant impact on the affordability and availability of home insurance. Since our launch, hundreds of thousands of people in the UK who are at risk of flooding have benefited from the Scheme.
“The package of seven recommendations we have announced today, taken together, will optimise the Scheme, making us more efficient, more responsive and more flexible. We are proud of our success so far in making flood insurance more affordable and accessible, and we have made solid progress with managing our transition out of the market by 2039. The measures we are proposing today allow Flood Re to go further than we have before in providing peace of mind to householders and will also make the UK more resilient to flooding in the future.”
Emma Howard Boyd, Chair of the Environment Agency said:
“We welcome the publication of the Flood Re Quinquennial Review today and support Flood Re’s proposals to lower premiums for homes with property flood resilience. This new initiative will help stimulate greater take up of measures that help people recover more quickly after a flood.
“Later this year we will be finalising our Flood and Coastal Erosion Risk Management Strategy and we will be working with government, the insurance sector and the Property Flood Resilience Roundtable to encourage more property owners to ‘build back better’ to help create climate resilient places.”
Mary Dhonau, Chief Executive of the Know Your Flood Risk campaign said:
“I am delighted that Flood Re is leading the way by promoting that homes should be made more resilient to future floods during the repair process. It's a win for everyone – it will reduce the appalling disruption being flooded brings for homeowners and ultimately save money for the industry by reducing future repair costs. Furthermore, rewarding those who take moves to protect their homes from being flooded, will help incentivise the transition to a risk reflective priced market.”