Flood Re: affordable flood insurance scheme delayed
Flood Re won’t be introduced until next year
Flood insurance scheme Flood Re has been delayed until April 2016.
The project has been in the works since June 2013, with the intention of having it live in the second half of this year.
Speaking to The Mail on Sunday, Brendan McCafferty, chief executive of Flood Re, said that the scheme will now go live in April 2016. “This is the first time we have said this publicly. It’s vitally important to get this right first time as it is a world first,” he said.
The scale and complexity of developing and implementing the system has been blamed for its launch being pushed back. It took until January this year for the insurance industry and Government to reach an agreement on how the scheme would work.
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What is Flood Re?
Flood Re is designed to help people afford to properly insure their homes against flooding. Instead of paying incredibly expensive premiums in at-risk areas, or being denied insurance altogether, residents will be able to protect their home for a fixed annual fee on top of their policy premium.
This fee varies dependent on Council Tax band of their property, ranging from £210 for Band A housing all the way up to £1,200 a year for Band H (Band I in Wales) with a standard excess of £250 for a flood claim.
While insurers will still cover the risks of non-flood events, such as theft or fire, they ‘pass on’ the risk of a flood to a collective fund, where the money from all customers using Flood Re is held. This pot will then be used to pay customers their claims in the event of flooding.
Residential properties built since 2009 will not be eligible to be covered by the Flood Re scheme. Commercial properties, including leasehold properties, will also not be included.
The scheme has been criticised for the exclusions of these properties among others, but the Association of British Insurers says that homes built after 2009 are intentionally not covered so as not to encourage building in high-risk areas.
Professor Krebs of the Committee on Climate Change called the scheme out in February for being “needlessly expensive” and called the inclusion of Council Tax bands H (and I in Wales) a “retrograde step”. He also criticised the scheme for not encouraging people to implement flood defences.
The pooled money will be supplemented by a notional average of £10.50 a customer, says the ABI, but it insists that this won’t add anything to your bills if you’re not living in an area at risk of flooding. It states that “customers already pay the equivalent amount to cross-subsidise high flood risk,” and the levy is a formalisation of this arrangement.
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Is your home at risk of flooding?
If you live in an area where flooding has been known to occur, you should take the time to read more on how to protect your home against flooding, as it is possible to reduce the cost of your home insurance with investment in flood defences.
You can sign up for flood warnings from the Government online, and the Gov.uk website also has guides on how to prepare for a flood, including how to get help during and after a flood.
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