Flooded? Try FloodRe

Large scale flood events highlight the impact of severe flooding, including the struggle to find affordable home insurance for affected properties.

Since 2000, flood insurance has been available to households at high risk of flooding via a series of voluntary agreements between the Government and members of the Association of British Insurers (ABI).

However, these agreements did not address the affordability of the home insurance provided, so the insurance companies and the Government worked to develop a different way of dealing with flood insurance.  The outcome was ‘flood re-insurance’ scheme – known as Flood Re – to support households at highest flood risk. An important part of the Flood Re scheme is to provide information to consumers about how to increase their understanding of their own level of flood risk and how they can take action to reduce that risk.

Flood Re is designed to:

  • enable flood cover to be affordable for those households at highest risk of flooding
  • increase availability and choice of insurers for customers
  • allow time for the Government, local authorities, insurers and communities to become better prepared for flooding; and,
  • create a ‘level playing field’ for new entrants and existing insurers in the UK home insurance market.

Flood Re takes the flood risk element of home insurance from an insurer in return for a premium based on the property’s Council Tax band.

In addition, they charge the insurer an excess of £250 on the flood part of the policy. Because Flood Re’s activities are subsidised by an annual levy on insurers of a total of £180m, the premium charged to insurers is below the rates insurers would normally charge on properties at the highest risk of flooding.

It is estimated that, over time, around 350,000 households could benefit from Flood Re.