U.K. agreement to help make flood insurance affordable in high-risk areas

The United Kingdom government – in the wake of ongoing negotiations with the Association of British Insurers (ABI) and Flood Re – announced last Thursday that an agreement has been reached on a number of matters regarding how Flood Re will operate.

The agreement means people in the highest flood risk areas will be better protected against spiralling insurance costs as Flood Re [a pooled insurance system that will allow even the highest risk homes to insure against floods] comes one step closer to implementation, notes a press release from U.K.’s Department for Environment, Food & Rural Affairs.

The department reports that the agreement allows for legislation to be laid in Parliament next year and – once approved by the financial regulators – enables Flood Re to operate as a reinsurer.

As part of the package of measures, criteria have been widened to include further properties that will be eligible for Flood Re. The insurance industry has agreed to fund this without passing costs on to other consumers, the statement adds.

“For the first time, we will ensure access to affordable flood insurance for people regardless of where they live. I’m delighted that we are one step closer to making this a reality and protecting people from spiralling insurance premiums,” says Environment Secretary Elizabeth Truss.

“Flood Re is of huge importance to hundreds of thousands of householders at risk of flooding, and this agreement allows us to progress beyond the design phase so that Flood Re can become a reality,” notes Brendan McCafferty, chief executive of Flood Re.

Adds Huw Evans, ABI’s director of policy and deputy director general, “Insurers are investing £17 million and thousands of hours of expertise to get Flood Re built and to play our part in helping manage this country’s flood risk. Today’s agreement marks a big step forward in this task.”

As part of the deal agreed, all Band H properties and Band I homes in Wales will now be included in Flood Re for the first time, notes another statement from ABI.

Flood Re expects to announce the successful bidders for both the managing agent and reinsurance broker in January, ABI reports.

Flood Re’s new chief financial officer will be Adam Golding, currently finance director of Amlin Underwriting Ltd., a Lloyd’s syndicate, who has 23 years experience as an insurance finance professional, while Aidan Kerr, currently assistant director and head of property at the ABI, where he has been instrumental in designing and shaping Flood Re, will serve as Flood Re’s operations director. Both appointments will be subject to regulatory approval as part of Flood Re’s authorization.