18th December 2014
The UK homes most at risk from flooding will be able to get more affordable insurance as a result of a landmark deal between the UK insurance industry and the Government.
A year on from devastating floods which caused havoc for thousands of people, the agreement paves the way for the development of Flood Re. This is a pooled insurance system, which will provide a fund that will pay out claims made by those flood risk households who without it would likely struggle to be able to get or afford flood insurance.
Huw Evans, deputy director general of trade group, the Association of British Insurers (ABI) said: “This agreement demonstrates once again the determination of insurers and the Government to get Flood Re up and running so that residents at highest risk of flooding can access affordable and available insurance.
“Insurers are investing £17m and thousands of hours of expertise to get Flood Re built and to play our part in helping manage this country’s flood risk. Today’s agreement marks a big step forward in this task.”
It is estimated that up to 500,000 homes could benefit from Flood Re. The new body will allow insurers to pass the flood risk element of any home insurance policy to it at a set premium based on the property’s council tax band. Insurers will continue to set premiums for both buildings and contents insurance, taking into account other risks including fire, theft, subsidence and the overall claims experience on home insurance policies.
Mark Christer, managing director, RSA Personal Lines, added: “We’re pleased the Flood Re discussions between Government and the insurance industry has reached a conclusion. Now that we have an agreed framework there is a substantial amount of work required to ensure that processes and systems across the industry can deliver this for our customers.”