The Future of Flood Insurance for households in the UK?

The Future of Flood Insurance for households in the UK?

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The terrible devastation throughout the UK over recent months has highlighted the fact that the current position of insurance for flood has not worked and has meant that some households have simply not been able to buy insurance including flood, or if they could the price has been prohibitive.

Back in 2000 the government set up an agreement between it and Insurers who were members of the Association of British Insurers called the “Statement of Principles”. The idea was fairly simple in that cover would attempt to be offered by insurers where the government made a commitment to reduce flood risk in an area within a five year period and where the property was not at significant risk of flooding according to the Environment Agency data.

This agreement was only ever intended to be a temporary measure whilst both sides agreed how a more suitable longer term agreement could be implemented. During the period from 2000 many attempts to reach an agreement have come and gone and the accuracy and extent of the Environment Agency mapping for flood data has improved. Insurers have also bought their own independent flood mapping data and used their own claims data to more fully understand which properties could be offered flood insurance. These facts combined have created the current situation with many hundreds of thousands of homes uninsurable against flood.

Welcome then to the future – “Flood Re”

In April 2016 we will see the launch of the scheme that will bring the hope of being able to insure properties at the highest risk of flood damage at a realistic price. The scheme will work by the insurance industry paying a levy each year into the fund, in addition they will be able to place the flood element of the policy of high risk properties into the fund for a fixed price based on the council tax band of the property insured.

The fund will then allow the insurer to claim against it should a flood claim be submitted although the insurer will deal with the policyholder as if they had insured flood themselves.

Exclusions

  • Homes built after 1st January 2009 (to discourage the building of homes on flood plains etc)
  • Commercial properties including commercial leasehold properties (except if you insure contents in the property which can be covered by the scheme)
  • Leasehold blocks with more than three units or where the freeholder does not reside in the block

Of course being able to insure your home against flooding is one thing and whilst this will be a great relief to a large number of individuals it does not take away the stress and worry that floods of the magnitude experienced in recent years still has on people and communities, investment is still required in protecting against flooding occurring, simply repairing the damage each time is not enough.

We welcome the introduction of Flood re after this winter and are now taking advance bookings for quotes to be carried out under this scheme once the rates become available from Insurers – contact us now.

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