Flood Re takes the flood risk element of home insurance from an insurer in return for a premium based on the property’s Council Tax band. In addition, we charge the insurer an excess of £250 on the flood part of the policy. Because Flood Re’s activities are subsidised by an annual levy on insurers of a total of £180m, the premium we charge insurers is below the rates insurers would normally charge on properties at the highest risk of flooding.
We estimate that, over time, around 350,000 households could benefit from Flood Re.
The diagram below outlines the process. Please click on each area for more information.
A home owner is someone wanting to purchase building or contents insurance. To be eligible to benefit for Flood Re the property must be used for residential purposes, have a council tax band (or equivalent) and be built before 2009.
Home owner purchases insurance as usual
A home owner will search for the most suitable and cost effective buildings and or contents insurance as usual. This purchase can be made through a variety of ways including online, by phone or through a broker.
Insurer pays out when homeowner makes a valid claim
Homeowner makes a claim to their insurer in the usual way. Once the claim has been verified the claim will be settled with the homeowner.
All insurers authorised to write domestic property insurance in the UK and have completed the on-boarding process with Flood Re can pass their flood risks to Flood Re.
Insurers pay premiums to Flood Re
Flood Re allows insurers to place the flood risk element of domestic property insurance with Flood Re at a capped premium, based on the council tax band of the property. Insurers will still compete in the free market for home insurance, and will continue to set overall prices.
Flood Re reimburses insurers for any claim made
Flood Re will reimburse insurers for the costs resulting from any valid claims from policies which have been passed, or ceded, to Flood Re, subject to an excess per policy.
Insurers pay an annual levy which funds Flood Re
Insurers will pay their share of an annual levy of £180m based on their share of the home insurance market. This obligation is laid out in legislation as part of the Water Act 2014.
Flood Re will collect the levy from insurers, assess policies that are ceded to them, ensure they are eligible to be accepted and pay valid claims. Flood Re will not set prices for the end customer or sell insurance directly.