Flood Re update

30 Mar 2017

Policy area: Residential

This week we joined a group of MPs and stakeholders, including the Leasehold Knowledge Partnership, British Insurance Brokers Association (BIBA), and Residential Landlords Association, for a meeting with the Flood Minister, Dr Thérèse Coffey MP, to discuss how the introduction of Flood Re is impacting excluded groups (leasehold property, SMEs, private landlords, etc). There has always been significant dissatisfaction on our part that, whilst Flood Re is a positive development overall, it has left some groups outside the scheme, and possibly finding it even more difficult to get flood cover.

It is early days, but the alternative scheme introduced by BIBA has helped some excluded property owners, but in areas such as Carlisle, Cockermouth, and Hebden Bridge, there remain significant challenges for excluded groups in obtaining affordable cover on reasonable terms. This is particularly the case where property has a previous claim history, and/or has not been the subject of significant Environment Agency investment, and/or the owners have not fitted resilience measures. The legislation that introduced Flood Re gives the government powers to intervene and extend the scheme where there is evidence of systemic failure in the insurance market, but that is a very high bar, and does not apply when a handful of communities are affected.

As a group we stressed that nonetheless it is important that these communities get cover if they (and their property markets) are to function properly and, if it is just a few communities, it would not be costly for the government to intervene. We also presented anecdotal evidence that, even in areas not at severe risk of flooding, cover is becoming harder to obtain for excluded groups. Flood Re itself is meant to be a transitional arrangement, being phased out after 25 years, and so there is also an imperative for the government and all stakeholders to be focusing more on resilience. The legislation also commits the government to a formal review after five years.