Since we last reported on the development of Flood Re last year there have been several improvements to the new initiative, which hopefully see many householders in flood prone areas able to purchase affordable flood insurance from April onwards in 2016.
Insurers will be able to buy reinsurance from Flood Re, a not-for-profit insurance fund, owned and managed by the insurance industry, for eligible households that are deemed to be at risk from flooding. It would appear that this now includes surface water flooding as well as those homes that are exposed to coastal or river flooding.
Also properties in all Council Tax bands, including H and I, will now be eligible to be covered by the scheme.
The cost of the reinsurance, as passed on to eligible households, will be capped to an amount geared to the applicable Council Tax band, starting at £210 per annum for homes in Band A and peaking at £1,200 for properties in Band H.
It is anticipated that the standard Flood Re excess (the amount paid by the insurer before they can claim from their reinsurance) will be £250, although curiously the guidance notes issued by Flood Re seem to leave open the option for the insurers to impose higher Flood excesses on their own clients!
The scheme will also be funded by a general levy on the insurance industry of £180 million a year. As insurers are being left to set their own terms for each policy they issue this does not mean that the cost will be passed on to clients whose properties are not prone to flooding but, there again, there is nothing like blaming the Government when insurers have to increase their premiums (they are currently having to pay for the floods in the North of England and Scotland).
As detailed before, many properties, especially those built after January 2009, blocks of flats and anything broadly commercial will be excluded from the scheme, so it will be important for anyone still finding it difficult to arrange flood cover after April to consult an insurance broker, such as ourselves.