Flood Re reduces property premium charges by 12.5% at 1/1 renewals
UK’s reinsurance scheme Flood Re is reducing the reinsurance premiums it charges to insurers from Jan. 1, 2019.
Premiums charged by Flood Re to insurers are set based on Council Tax bands, and from the start of 2019 they will be reduced by 12.5 percent for buildings and 33 percent for contents.
The decision is anticipated to reduce the costs of flood insurance cover for people most at risk of flooding in the UK.
The decision will mean a reduction of between £44 and £112 for a combined building and contents policy, according to a corporate statement. Flood Re has said earlier in July that it was planning to reduce the premiums it charges to insurers from the start of 2019.
Since then, Flood Re consulted with seven major insurers – responsible for two-thirds of Flood Re’s overall distribution and analysing more than 6.9 million test records – to assess the effects of reducing reinsurance premium charges. While the end-price charged to consumers is decided by individual insurers, this analysis anticipated that a reduction in reinsurance premiums would result in reduced prices for consumers.
The analysis also found that a significantly greater percentage reduction was appropriate for contents premiums compared to buildings.
“Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future,” said Flood Re CEO Andy Bord.
The premium reduction announcement follows Flood Re’s decision not to increase premiums in April 2018 in line with inflation.
“Our purpose is to make flood cover as part of home insurance more affordable and available,” Bord said. “I am delighted today to announce that we will help to make flood cover even more affordable for those most at risk of flooding by reducing our premiums.”
“Flood Re was encouraged to note the results of our consultation, confirmed across the market, that our premium reductions will result in lower premiums for consumers.”
“Therefore, if some households in flood-prone parts of the country have previously not taken out home insurance for cost reasons, we hope that this move may encourage them to obtain cover. Consumers should always shop around to get the right deal for them,” Bord added.
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