Frequently Asked Questions

Here is some further information about Flood Re and its background, what’s covered and why and funding issues.

To see in full which properties are eligible for the Flood Re scheme please click here.

If your question isn’t answered here please contact us on information@floodre.co.uk, however, if you have a claim or any issue about your individual insurance policy please contact your insurer directly.

General

  • Why is Flood Re necessary? Why can’t insurers simply not continue to follow the Flood Insurance Statement of Principles that has been running since 2000?

    In the face of the rising flood risk, we have estimated that 350,000 flood risk UK households would struggle to obtain affordably priced flood insurance without a scheme like Flood Re.

    The Government and others agreed with us that the Flood Insurance Statement of Principles established in 2000 had become unsustainable and that a new approach was needed to help households at risk of flood obtain affordable flood insurance. The Statement was only ever intended to be a temporary measure and restricted customer choice as insurers only had commitments to their existing customers, and new insurers could decide to whom they offered flood insurance.

  • How does Flood Re work?

    Insurance companies are  able to pass on the flood risk element of eligible home insurance policies to Flood Re. Flood Re charges the insurers a premium for each policy, based on the property’s Council Tax band. It is estimated that insurers will pass on the flood risk element of buildings, contents or combined home insurance policies for around 350,000 households.

    Flood Re makes no difference to the way customers themselves buy their home insurance. All claims will continue to be handled by the insurance companies themselves, and insurers will continue to set the premiums they charge to their customers, taking into account the Flood Re premium and other important factors (such as the risks of fire, theft, subsidence and other costs).  As a result of the Flood Re scheme, there should be greater choice of home insurance policies for customers at risk of flooding and those policies should be more affordable.

  • What is being done to prevent flood damage in the first place? Doesn’t this scheme just encourage insurers to keep paying out?

    Part of the Flood Re scheme includes providing information to people about how to increase their understanding of their level of flood risk and where they can find information about taking action to reduce their risk, where possible. Flood Re will only operate for 25 years, allowing time for the Government, local authorities, insures and communities to become better prepared for flooding. This could mean, for example, making use of effective land planning, sustainable drainage, sustainable development and effective flood risk management.

    When Flood Re ends, it is anticipated that there will be a system for home insurance prices that will be based more accurately on the kind of flood risks each household actually faces (known as ‘risk reflective pricing’). There is, therefore, an incentive for homeowners, local authorities and the government to take action to try and mitigate the effects of flooding.

  • Will the cost of home insurance fall as a result of Flood Re?

    Those people who pay higher premiums as a result of their home having flooded could expect their home insurance to become more affordable.  This is due to a combination of insurers being able to pass the flood risk to Flood Re, and the policyholder now being able to shop around in a more competitive market that may have been closed to them previously.

    Flood Re does not set prices for home insurance, but gives insurers the opportunity of passing to it the flood risk element of a home insurance policy (buildings and contents) at a premium that is capped, depending on the Council Tax band of the property. It is up to an insurer to decide whether they wish to pass the flood risk element of the cover to Flood Re.

  • Why has my insurer added a cost on to my premium to cover Flood Re even though I don’t live in a high risk area?

    Flood Re is partly subsidised by a tax levied on all insurers that offer home insurance in the UK. Flood Re does not regulate if or how insurers choose to pass on this tax to their customers. It is therefore possible that an insurer will choose to spread the costs across even those policies within their portfolio that do not include high flood risk.

  • Will customers need to have any direct contact with Flood Re?

    Customers should continue to buy their home insurance in the same way as before and all the contact will be directly with their chosen insurer.  If a customer needs to make a claim, they should contact their insurance company directly. Flood Re works ‘behind the scenes’ with the insurance company, to reimburse them for any payments they make to their customers and so there is no need for homeowners to contact Flood Re directly.

Funding

  • How is the scheme funded?

    Flood Re charges insurers a fixed premium for flood risks passed to it, based on a property’s Council Tax band.  In addition, Flood Re charges an insurer an excess of only £250 per policy. To cover the shortfall between the estimated cost of flood damage and the new, lower premiums and excesses, insurers pay Flood Re a combined total levy of £180m per year.

    Insurers remain responsible for pricing and deciding how best to pass on the benefits of lower premiums and excesses charged by Flood Re to customers. For further information on the funding structure click here

  • What does the scheme mean for customers? Will insurance premiums be capped?

    Insurers are still in control of pricing for overall home insurance. Flood Re charges a fixed premium per policy to insurers, relating to the flood element of the policies transferred to Flood Re. These premiums are lower than would be the case if the flood risks were fully taken into account, as contributions to the costs come from a statutory levy on all home insurers in the UK.

    Flood Re also offers insurers an excess per policy of £250. Although Flood Re has no control over the way insurers set the excesses for individual customers, this mechanism should benefit people living in areas at risk of flooding.

  • What happens if there is a large flood in the early years of the scheme – will there be enough money in the fund to pay claims?

    Yes, Flood Re has purchased its own reinsurance and holds reserves and capital so that it can fully cover all claims in at least 99.5% of years.

  • With Flood Re being reviewed every five years, what guarantee is there that the level of the premium cap and/or the levy will not increase in the future?

    Any changes that may be needed at each five year review will reflect the need for the transition to risk reflective premiums over Flood Re’s 25 year existence. Any changes that are considered necessary will be discussed with and approved by the Secretary of State and effected through a change in the current legislation.

Eligibility