Proposals from UK’s Flood Re could mean more money to ‘build back better’
Flood Re, a joint initiative between the UK government and insurers, has made key proposals that would see it work with insurers to help claimants “build back better” by permitting the payment of claims to include an additional amount for resilient or resistant repair, “above and beyond the original damage”.
The recommendations came in the initiative’s quinquennial review published today (8 July 2019).
Under the proposals, Flood Re has also called for the power to reward householders who “proactively install flood resilience measures” by offering them discounted premiums on their home insurance policies, when they participate in the scheme.
The idea is to incentivise the take-up of property level flood resilience measures by householders, encourage the growth of the resilience products sector and reduce the costs and disruption of future flooding.
The report and recommendations have been sent to the UK secretary of state for Environment, Food and Rural Affairs for review.
James Dalton, director of general insurance policy at the Association of British Insurers, said: “The insurance industry established Flood Re as part of our commitment to addressing the risks associated with the growing threat from flooding. It’s already made a significant impact, covering almost a quarter of a million properties and creating a competitive market which allows householders who’ve experienced flooding to shop around for their cover, making savings in the process.
“It was always expected that Flood Re would evolve over time and it’s good to see sensible recommendations being made about the role it could play in getting more flood resistance measures installed in individual properties. Insurers are on the front line supporting customers when flooding happens and know well the value of making homes and businesses more resilient to future floods.”
Flood Re also recently published its annual report for 2018/19, which showed that just under a quarter of a million UK properties have benefitted from the scheme since its launch three years ago. It also highlighted that flood insurance in the UK had become more affordable, with data from Consumer Intelligence revealing that four out of five householders with a previous flood claim saw price reductions of more than 50 percent, while there are now 64 insurers ceding policies to Flood Re, equivalent to 94 percent of the home insurance market.
The initiative also published its financial position with profit before tax of £136 million (up from £134 million in the prior year), an increase in invested and liquid assets to £358 million (up from £257 million in 2018) and a capital solvency ratio of 347 percent compares to 425 percent the year before.
Andy Bord, chief executive of Flood Re, said: “Flood Re has already had a significant impact on the affordability and availability of home insurance. Since our launch, hundreds of thousands of people in the UK who are at risk of flooding have benefited from the scheme.”
He said the package recommendations “will optimise the scheme, making us more efficient, more responsive and more flexible”.
“We are proud of our success so far in making flood insurance more affordable and accessible, and we have made solid progress with managing our transition out of the market by 2039. The measures we are proposing today allow Flood Re to go further than we have before in providing peace of mind to householders and will also make the UK more resilient to flooding in the future.”
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