People who live in flood-risk areas are set to benefit from a national scheme launched today aimed at providing them with affordable home insurance.
The Association of British Insurers (ABI) said the Flood Re scheme was a ‘world-first’, while the Committee on Climate Change (CCC) has previously criticised the scheme as ‘needlessly expensive’.
The new scheme will help residents at risk of flooding
Flood Re is a re-insurance scheme first discussed by the Government in June 2013 in collaboration with the ABI.
Insurers pass on the flood risk part of home insurance policies and are paid back from the Flood Re scheme - backed by a £180m annual levy on insurers - in the event of a successful claim.
The levy is likely to be passed on to the general population though higher insurance.
The Flood Re scheme applies to residential properties in England, Wales, Scotland and Northern Ireland built before 2009.
Flood Re says it should help insurers to provide more competitive policies, benefiting 350,000 households ‘over time’.
Sir John Krebs, chair of the CCC’s adaptation sub-committee, told the BBC in February that the scheme could be counter-productive as it largely removes the financial incentive for households to take steps to avoid being flooded.