Positive news this week for people who are most at risk of flooding in the UK as from January next year, it is expected that the costs of flood insurance cover will be reduced.
Flood Re - the joint initiative between the Government and insurers which aims to make the flood cover part of household insurance policies more affordable – has announced it is reducing the reinsurance premiums it charges to insurers from 1 January 2019.
While the end price charged to consumers is decided by individual insurers, it is anticipated that a reduction in reinsurance premiums will result in reduced prices for homeowners.
Premiums charged by Flood Re to insurers are calculated on Council Tax bands. From the start of 2019 they will be reduced by 12.5% for buildings and 33% for contents. This equates to a reduction of between £44 and £112 for a combined building and contents policy.
The result follows Flood Re’s decision not to increase premiums in April 2018 in line with inflation as well as consultation with seven major insurers.
6.9 million test records were used to assess the effects of reducing reinsurance premium charges. Among the findings was that a significantly greater percentage reduction was appropriate for contents premiums compared to buildings.
Andy Bord, Chief Executive of Flood Re, said: “Our purpose is to make flood cover as part of home insurance more affordable and available. I am delighted today to announce that we will help to make flood cover even more affordable for those most at risk of flooding by reducing our premiums.
“Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future.
“Flood Re was encouraged to note the results of our consultation, confirmed across the market, that our premium reductions will result in lower premiums for consumers.
“Therefore, if some households in flood-prone parts of the country have previously not take out home insurance for cost reasons, we hope that this move may encourage them to obtain cover. Consumers should always shop around to get the right deal for them.”
Flood RE was launched in early 2016 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.