What happens after Flood Re?

The primary purpose for the Flood Re scheme is to manage the insurance market’s transition to risk reflective pricing. It is looking very likely that come 2039, flood pricing will be reflective of a scoring system, this scoring being based on the efficacy of flood resilience and resistance measures homeowners have put in place. Those homes that have flooded will have benefitted from Build Back Better and may score well, but those for clients who haven’t or are blissfully unaware and do nothing, future flood insurance will become expensive. A 2022 Red Cross report stated that only 25% of people who live in high-risk flood areas actually had an understanding of the flood risk to their home.

The Government has committed to long-term investment in flood risk management and defences to reduce the risk of flooding for the nation and Flood Re are working with insurers to improve flood modelling and rating. Us brokers, we are at the coal face, we are the ones with direct contact with homeowners so surely, we have a collective duty to educate homeowners and to help and support our clients to reduce the flood risk, introduce flood resilience measures and improve their ability to get flood cover in the future.

Flood Re publish a plan every 5 years outlining the steps they are taking to achieve this transition, most recently introducing the Build Back Better scheme. This is a huge step forward and despite this “betterment” going against a fundamental principle of insurance, it has been well received and supported by insurers. Therefore, we surely have a duty to our clients to make sure they are placed with insurers who support and offer Build Back Better options, and this should be incorporated into our placement strategies.

Climate change is no longer something that may happen it the future, we are living it now and it is widely publicised that the UK is going to be faced with wider spread flooding in years to come. Going through a flood is extremely traumatic, the home is destroyed, personal and sentimental belongings ruined and having to live in temporary accommodation is upsetting for the whole family. If you want to see real life stories of how devastating floods can be, head to Mary Long-Dhonau’s website Flood Mary. Mary also talks very openly about the number of times she has been flooded herself and demonstrates some of the flood resilience measures available and the impact they have.

Talking to the residents of a local community recently, I felt that there was some uncertainty as to who has the ultimate responsibility for protecting homes from flooding, it isn’t necessarily the Environment Agency, Flood Re or the Government, it’s homeowners who need to act. Surely the broking industry and insurers have a moral duty to help clients understand the long-term consequences of not managing their flood risk and encourage them to engage with companies who offer flood resilience measures and advice and getting a long-term plan in place now could also help spread costs. 15 years is going to fly by, and we should grab the opportunity to help shape the future of flood insurance.