Flood Re pledges to reduce premiums in 2019
Flood Re has today announced that, for the first time, it will reduce the premiums it charges to insurers from the start of 2019. The Annual Report, which points to reviewing the premium, was published today and covers the period 1 April 2017 to 31 March 2018.
In consultation with insurers, Flood Re has commenced a process of reviewing premiums which will conclude by the end of September. Flood Re is considering a range of different reductions in the level of premiums for buildings and contents policies in order to optimise the benefits of the Scheme.
Once the changes are confirmed, insurers will implement the necessary changes to come into operation from 1 January 2019. This announcement comes after Flood Re decided not to pass on the annual increase to premium thresholds in April 2018.
Other highlights in the 2017/18 Annual Report include:
• Increased volumes: 150,051 policies have been ceded to Flood Re by 31 March 2018, meaning a continuing growth in the number of people across the UK benefitting from the Scheme.
• Improved availability: Independent research (by Consumer Intelligence) shows that before Flood Re’s introduction, no households who had made prior flood claims could get quotes from five or more insurers. Availability has now improved so that 100% can get a quote from 2 or more insurers and 68% have a choice of 15 or more.
• Improved affordability: The Consumer Intelligence data shows that four out of five householders with a prior flood claim saw price reductions of more than 50%.
• Strong competition in the home insurance market: More than 60 insurer brands – covering 90% of the home insurance market – are now able to cede policies to the Scheme.
• A strong financial position: Including an increase in gross written premiums to £32m (from £28m), profit before tax of £134m (£130m last year), an increase in invested and liquid assets to £257m and an increase in the capital solvency ratio to 425% (from 237%).
Andy Bord, Chief Executive of Flood Re, said:
“After two years of operations, we are pleased that the Scheme’s objective, of ensuring the availability of affordable home insurance for people in flood-prone parts of the UK, continues to be met.
“Our careful management of the Scheme means that we have built up good reserves and so are well-placed to respond to any future flooding events.
“Our strong position means that we are in a position to reduce the premiums that we charge insurers in 2019. We are therefore consulting with the industry about the right level of reduction, as well as how the cuts should be allocated across buildings and contents policies. In the UK’s competitive home insurance market, we anticipate these premium reductions will be passed on to consumers.