UK to have reinsurance pool when will Australia———-Flood Re is the insurance industry’s solution to ensuring that “domestic property insurance continues to be widely available and affordable in areas of flood risk without placing unsustainable costs on the policyholders or the taxpayer.”
Flood Re is the insurance industry’s solution to ensuring that “domestic property insurance continues to be widely available and affordable in areas of flood risk without placing unsustainable costs on the policyholders or the taxpayer.”
The pool would operate to reinsure domestic properties in high flood risk areas. Such households are increasingly finding flood insurance unaffordable or unavailable following the shift towards risk-reflective pricing as more robust flood risk data becomes available to insurers.
Eligibility for reinsurance by the pool will be measured by assessing householders’ flood risk premium against new ‘eligibility thresholds’ based on council tax bands. Households whose flood premium exceeds these thresholds will be eligible for the pool and Flood Re will assume 100% of the flood risk in exchange for a premium equal to the relevant eligibility threshold. In the event of a flood claim the insurer would pay the claim directly to the insured and seek reimbursement from Flood Re. It is proposed to exclude some properties from the scheme, including those built since 2009, the highest value properties and “genuinely uninsurable properties”.
The pool will be funded through insurance premiums and an annual industry levy (currently expected to be £180m a year in aggregate) based on each insurer’s share of the UK home insurance sector. Where funding from these measures is found to be insufficient to meet claims costs, an additional industry levy, capped at a monetary level equivalent to a 1:200 year loss scenario, has been proposed.