Flood Re – Update
Flood Re have released their quinquennial review with changes to support people who live in high-risk flood areas. (To remind ourselves, the purpose of Flood Re is to promote the affordability and availability of flood insurance and to manage the transition of the market to a risk reflective pricing strategy come 2039).
Each review looks at past performance and future changes. The report reflects on Flood Re’s performance against their two core obligations, scoring “highly successful” in relation to promoting the availability and affordability of flood insurance and “making good progress” in the management of the transition of the market.
The statistics (*The Quinquennial Review 2024) certainly supports a story of success:
- 99% of households in high-risk areas of flooding being able to obtain quotes from 15 insurers or more. Before Flood Re this was 8% being only able to obtain 2 quotes.
- 4 out of 5 homeowners who have previously flooded seeing a reduction in premium of more than 50% when Flood Re was introduced.
- 85 different insurers signed up and providing policies backed by Flood Re, which is 94% of the UK home insurance market.
- In 2023-2024 financial year, 288,567 policies were ceded to Flood Re, with more than half a million benefitting since 2016.
There are six main proposals for change in the report, three of which I feel directly affect the Broking Community and our clients and which demonstrate the continued progress Flood Re is making in recognising the cost-of-living crisis.
- Following careful monitoring of the affordability they are proposing the removal of the flood claim excess which will assist homeowners in the lowest Council Tax Bands, these costs savings may encourage a higher take up on property flood resilience measures (PFR).
- Proposal of improvements to Build Back Better (BBB).
- The average cost of claims has increased and to help with a successful market transition, flood claims costs need to reduce along with the risk of reoccurrence. To achieve this the number of homes with PFR measures in place needs to increase and Flood Re are recommending the BBB initiative increase from £10,000 to £15,000
- Making it mandatory for losses over £100,000 that Loss Adjusters make recommendations in their reports on PFR measures to reduce future flood risk and impact.
- Encouraging insurers to offer BBB across multiple households in communities
- The cost of flood surveys to be included within claims costs
- Improvements in the way insurers participate in BBB
- Raising awareness. Currently it is not clear to clients that their flood risk is being ceded and benefitting from the scheme or that BBB is available. Flood Re propose clearer documentation including education on the scheme and its end date of 2039.
These are positive changes and Flood Re will continue to consult with the Government, Defra and the Environment Agency on their commitment and investment into reducing the flood risk across the UK. But it remains the case that the Broking community should continue to build awareness, provide guidance and educate our clients to ensure the continued success of Flood Re and to work towards an effective solution for homeowners come 2039.
Suzi Rackley Dip CII