Government says new insurance programme, Flood Re, is on track to be up and running within months, offering flood cover from £210
Flood hit North East home-owners could soon be able to find affordable insurance with the Government saying a new scheme should be up and running by the summer.
The Flood Re project will see an average of £10.50 from all customers’ bills diverted into a new pot, against which insurers will insure themselves against the potential increased claims caused by devastating weather.
And in response to a question from Wansbeck MP Ian Lavery, Environment Secretary Elizabeth Truss said the new programme is on schedule to start within months.
“The residents of Morpeth in my constituency are delighted with the actions of the Environment Agency and the near-completion of the flood alleviation scheme, but they are really concerned about flood risk insurance,” Mr Lavery asked Ms Truss in the House of Commons. “What stage are we at in the discussions and negotiations on Flood Re and other affordable insurance schemes?”
“We are on track for Flood Re to be established this summer - we are currently working on that,” said the Secretary of State for Environment, Food and Rural Affairs.
The Flood Re scheme will be a not-for-profit flood “reinsurance” fund, owned and managed by the insurance industry, and established to ensure that the 350,000 highest risk homes can receive affordable cover for the flood element of their household property insurance.
It is similar to a scheme called Pool Re, which was set up in the 1990s after the IRA bombing of the City of London, and which covers insurers for loss incurred by terrorism.
Insurers will sell insurance in the normal way, with the money from the flood element of each home insurance policy placed in Flood Re, with the amount based on the property’s council tax band.
For Band A homes the cost of flood insurance will be around £210, up to £540 for Band G homes.
If flooded, families will deal with their insurer in the usual way to get their claim paid and then Flood Re will reimburse the insurer for the cost of the claim.
The insurance industry is paying £10m to get Flood Re up and running and it will then make its money from both the flood element of the policies for high risk homes and an additional levy on the industry, equivalent to around 2.2% or £10.50 of a policy’s cost which all households are already paying to subsidise claims for flood damage.