Flood Re, the UK’s backstop for home insurance flood claims, has published its first transition plan, setting out how it expects the home insurance market to “return to risk-reflective pricing by 2039”.
The Flood Re fund expects to go live from April, subject to regulatory approval, mutually funding and reinsuring UK insurers’ flood risk to allow lower premiums and excesses to UK homes at high risk of flooding.
Flood Re said it expects to exist until 2039. At present there are no published plans to extend the scheme to cover commercial insurance flood risk.
“We will be ready to accept policies in April and consumers should speak to their insurer and be prepared to shop around from that point on,” said Brendan McCafferty, chief executive of Flood Re.
“Flood Re has an important role in ensuring any action is taken on solid evidence. However, as Flood Re has limited powers, we rely on developing strong relationships with the
Flood Re is collecting data to assess: how the data it collects on flood claims can be used to cut the cost of repairs; where spending and incentives might best reduce costs from flood damage; and how to incentivise householders and insurers to take the best measures to protect homes against flooding.
“This transition plan is important because it is the first time we have been clear about what the market should look like when we end in 2039,” said McCafferty.
“Whether it is in our transition plans, in public debate or private engagement, Flood Re will remain true to its purpose of helping high risk households to access affordable flood cover,” he added.
For a more detailed look on the costs of UK floods in December 2015 into January 2016, read this feature from the latest (February) edition of Reactions magazine.