Flood Re is planned to be in place until 2039. As well as helping to enable home insurance to remain affordable in areas at risk of flooding, Flood Re also has a role to help manage a transition to home insurance prices that fully reflect flood risk. This means that people benefiting from Flood Re need to become more aware of their flood risk and, if possible, take action to reduce it.
In 2039 the Flood Re Scheme will end and there will be a free market for flood risk insurance. Flood Re undergoes a review every five years to assess its progress and any changes that should be made to the Scheme.
2022 saw the conclusion of Flood Re’s first Quinquennial Review (QQR) with many changes made to improve the Scheme’s efficiency and effectiveness, and support Flood Re’s purpose to manage transition to a risk reflective market.
The changes to the Scheme, which came into force from 1 April 2022, are below:
Changes to the Scheme
Enabling & Accelerating Transition
1. Build Back Better (BBB)
From April 2022 the government will allow Flood Re to pay claims which include an amount for Property Flood Resilient repairs up to a value of £10,000 above the cost of like-for-like reinstatement. To read more about BBB visit our hub page.
Improvements to the efficiency and effectiveness of the Scheme
2. Levy I
The Government will allow Flood Re to set its levy every three years instead of every five, and to amend the figure for the levy from £180m to £135m for the three-year period from 1 April 2022.
3. Liability Limit
Government will allow Flood Re to set the Liability Limit every three years instead of every five aligning it with the new levy setting cycle and the outwards reinsurance procurement. As previously agreed with Government, the Liability Limit will be £1.9bn for the three-year period from 1 April 2022 and we have procured reinsurance on this basis.
4. Protection of the Loss Limit (Stop Loss)
Earlier in the year, the Secretary of State consented to a permanent change in our Articles which affords us discretion in how we protect the Loss Limit going forwards.
The team continues to work with Officials at DEFRA and HMT to finalise the mechanics of our new investment framework and appetite that will reduce inflationary erosion of assets.
Read our Transition Plan.