There are serious flaws in the new Government-backed scheme called Flood Re, which is due to come into force in 2015 with the aim of guaranteeing affordable insurance for households in flood-prone areas in the UK, according to Bronek Masojada, chief executive of Hiscox.
Speaking on BBC Radio Four this morning, Masojada warned that large exemptions will still see many people left with unaffordable home insurance and could lead to those who do not qualify for the scheme "subsidising their neighbours" when they are flooded.
He said: "There are many exclusions from those who will benefit. If your house was built after 2009, if you are an H band council taxpayer, if you are a buy-to-let landlord or if you live in leasehold property you won't be able to access Flood Re subsidised insurance.
"And this will lead to a situation where in two years' time you will be asking me back to explain why someone who is paying the levy has got unaffordable or no home insurance yet they are subsidising their neighbour. That is just not practical or fair and we are calling on the Government to rethink the exclusions."
A series of severe storms brought the country's wettest January in nearly 250 years. The industry has estimated the cost of insurance claims at between £500m and £1bn.
When Hiscox released its annual figures this morning the group said that it supported the overall initiative but felt that the current plans are unfair and unworkable.
Under the current proposals, excluded homes in high-risk areas will have to pay a levy to fund Flood Re, but will be unable to purchase subsidised insurance from Flood Re, even though their neighbours and other bands would be able to.
Hiscox observed: " It has been widely reported that the levy would be £10.50 per residential property. This is highly misleading; it will actually be 2.2% of premium paid". Hiscox estimates that Band H homes would end up paying 20 times more than the average home in Britain.
Hiscox copncluded: "We are calling on the Government to work with us to find a solution to ensure that either these groups are included in Flood Re, or that they are excluded fully - both in payment and benefit."