Flood Re agreed as answer to flood-prone properties

Until recently the issue of homes in known high risk flood areas was addressed with an agreement between Government and the insurance industry but in 2015 that will be replaced with a new agreement called Flood Re. We have produced an update for property owners and managers who might be affected.

The issue

Floods are affecting more and more properties in the UK and in some areas the risks are so high that properties are in danger of becoming virtually uninsurable.

To address the issue the Government made an agreement with the insurance industry called the Statement of Principles that committed insurers to offering insurance to home owners in affected areas in return for the Government improving flood defences.

Although only intended as a short-term measure the Statement of Principles has been in place for many years.

New agreement

Flood Re will be run and financed by insurers as a not-for- profit fund, which will cover the cost of flood claims from high-risk homes.

Insurers will pass the flood risk element paid by those households deemed at high risk of flooding to a fund. Premiums for the flood risk will be calculated based on council tax banding up to a maximum limit depending on the band.

Flood Re will be designed to fully deal with at least 99.5% of years. Even in the worst 0.5% of years, Flood Re will cover losses up to those expected once in every 200 years – a year six times worse than the horrendous floods of 2007.

Subject to the resolution of a number of operational issues, including governance and regulatory approval, the target is for Flood Re to be up and running by the summer of 2015.

How does this new agreement affect policyholders?

In the short-term nothing changes but over the next two years more details will be forthcoming.

We will keep you up-to-date as we get nearer to the launch.

What to do next

We hope you found this information helpful. If you have any questions about flood cover on your properties please contact us. We are experts in property insurance and understand all the issues so if you’d like more information, or would like us to review your cover please call our experts now.

Call 01789 761670

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