Changes to the Flood Re Scheme announced  to ensure the continued sustainability and success of the Scheme

May 8, 2024

Flood Re, the joint initiative between the UK Government and insurance industry, today published changes to key scheme parameters aimed at ensuring the continued availability and affordability of flood insurance. These adjustments, agreed by the DEFRA Minister of State Robbie Moore MP, align with regulatory requirements and address the evolving landscape of reinsurance and flood risk management.

The changes will mean:

  • increasing the Liability Limit to £3.2 billion (from £1.9 billion), 
  • raising the Loss Limit to £250 million (from £100 million) 
  • and raising the Levy on the Insurance industry by £25 million to £160M annually. This was originally set at £180M at the start of the scheme in 2016*. 

The changes will come into effect from April 2025 and be applicable through March 2028.

The decision, agreed by the Department for Environment, Food and Rural Affairs, stems from Flood Re’s regular review process of the Levy and Liability Limit, as mandated by statute and a proactive review by Flood Re of the Loss Limit. These modifications aim to ensure that the Scheme remains viable, can accommodate increasing policy numbers, and responds to changes in the global reinsurance markets, such as rising costs and capacity constraints. Importantly, it also means that we can put more of Flood Re’s capital to work supporting the Scheme and successfully place one of the largest natural catastrophe reinsurance schemes in Europe.

Flood Re is a dynamic scheme that has to respond to market conditions. All insurers have seen these conditions harden significantly in the last three years due to inflation and a global constriction in the availability of reinsurance. These changes will ensure that Flood Re can adapt to market conditions and procure the reinsurance that it needs.  Due to the careful management of the Scheme, even with these changes, both Levy 1 and most inward premiums will be lower in real and nominal terms than when the Scheme launched. 

Andy Bord, CEO, Flood Re, said: “Today’s changes underscore our commitment to evolve the Scheme, including the successful placement of one of the largest natural catastrophe reinsurance schemes in Europe, ensuring that flood insurance remains both affordable and accessible to those who need it most. These adjustments, which are essential for ensuring the scheme’s financial resilience, are designed to balance the interests of all stakeholders, meet regulatory requirements and continue to deliver affordable home insurance to those at high risk of flooding.”

For householders, these changes will mean that those eligible can continue to be confident that flood insurance will be available in the UK. Flood Re’s latest market analysis found 99% of homes at risk could access multiple quotes.