Just over a year ago, an innovative and exciting joint government/insurance industry scheme called “Flood Re” was introduced, designed to help with the lack of affordable property insurance policies for people living in high risk flood areas or who for those who had experienced a flood before.
The history of Flood Re
The government and the Insurance industry got together to examine the problems associated with flood risk properties and constructed Flood Re (an abbreviation of “Flood-Reinsurance”) as a result. This is both an organisation and an insurance scheme.
Here’s a simplified description of how it operates in support of individual insurers and through them, policyholders:
- you take out a home cover policy including flood risks with an insurer. Your premium will be calculated based upon the rateable value of your property;
- a portion of your premiums are passed by your insurer into the Floor Re scheme;
- the total premiums received by Flood Re are supplemented by a fixed levy charged on all household insurance policy premiums (paid by the insurers);
- in the event of a flood claim, your insurer will pay out in qualifying circumstances, as covered by your policy;
- Flood Re will then pay out to your insurers.
- That might sound complicated but it’s actually a simple and effective scheme designed, in effect, to share the risks across all participating insurers rather than asking any one of them to shoulder the entire burden.
Does it work?
The really good news is that all of the above is transparent to the policyholder. In terms of the mechanics of how it all works, you don’t need to worry about a thing as, in the event of claim, you still deal with your insurer and not Flood Re.
However, what you do need to take into consideration is that not all insurers are participants in Flood Re. If they’re not, you might be paying unnecessarily high premiums, facing a high mandatory excess or getting reduced cover.
How can we help?
At UKinsuranceNET, we have a number of Flood Re insurers on our panel, which means that we can help you access cost-effective, comprehensive cover – even if you have previously suffered from a flood before or live in a high risk area.
Further reading: Guide to Flood Insurance.