Flood Re prepares to secure £2.1bn reinsurance cover
Flood Re, the UK Government’s scheme to pool flood risk, has unveiled plans to secure £2.1 billion of reinsurance cover, one of the largest purchases in the world.
The three to five year programme will be one of the five largest ‘natural peril’ reinsurance deals struck globally and the second biggest in Europe, according to Flood Re.
With plans to accept its first policy in April 2016, a detailed business plan has recently been submitted to the UK’s financial regulators for regulatory approval.
In addition, the regulations to establish Flood Re have been approved by Ministers for scrutiny in Parliament to now begin.
Guy Carpenter is the reinsurance broker running the procurement process.
Brendan McCafferty, chief executive of Flood Re, said: “Flood Re is a complex scheme and we are pleased with the progress which is being made. Flood Re has plans in place and is on course to accept its first policy, but there is still a lot to do.
“The systems we are creating need to be tested thoroughly if we are to get it right first time for UK home insurance customers at risk of flooding, regardless of how they buy their cover. This means testing with potentially hundreds of companies in the insurance market.
He added that the start of its reinsurance procurement and the submission of its application to the financial regulators represent two huge steps towards Flood Re becoming a reality.
“With the regulations now ready to progress through parliament, we will be working closely with the Secretary of State and her team at Defra, as well as relevant MPs and peers, to ensure the remaining legislation to launch Flood Re is agreed as soon as possible,” added McCafferty.
Russell Higginbottom, chief executive officer of Swiss Re UK, added: “Swiss Re is very supportive of this type of initiative, which aims to ensure the provision of affordable flood cover to individuals.
“We are pleased to see that the UK is tackling the issue in this country and strengthening people’s ability to recover from the financial impact of flood losses. The cooperation between Government and the insurance industry is an excellent model for closing the flood protection gap.”