Otto Thoresen, director general of the Association of British Insurers, said in a statement that the government and the ABI “continue in constructive discussions on the future of flood insurance, specifically on how the components of the ABI’s Flood Re proposal can be designed to best meet the objectives of the government, the insurance industry and, most importantly, the needs of those at risk of flooding”.
He said there are still important issues to resolve and no deal has been reached, but negotiations are advanced and “we will bring negotiations to a conclusion as soon as practicable”.
The ABI is looking for a flood scheme that has government support so that it can continue to offer cover to those at high risk of flood.
The Flood Re scheme was designed by Aon Benfield and endorsed by the ABI. Under the proposed Flood Re insurance fund, affordable flood insurance would be available to those at high flood risk, with the premiums set at an agreed amount.
This would be paid for by a small levy on insurers. It is likely that insurers would choose to pass some of these costs onto their customers, the ABI says. The amount of the levy on the premium, along with other details, is what’s currently being discussed.