Flood Re, the UK’s government-backed reinsurance scheme, has cut the reinsurance premiums it charges to insurance companies as of 1 January 2019, which in turn should lower the cost of flood protection for those most at risk of flooding in the UK.
Premiums charged by Flood Re to insurers are set based on Council Tax bands, and from the start of 2019 they will be reduced by 12.5% for buildings and 33% for contents. This will mean a reduction of between £44 and £112 for a combined buildings and contents policy.
The scheme has previously explored the effects of lowering reinsurance premiums with seven major primary insurance companies, which make up two-thirds of the scheme’s total distribution, and analysed over 6.9 million test records.
Ultimately, the end premium charged to customers is decided by the individual insurers. However, the analysis anticipated that a reduction in reinsurance premiums would result in cheaper flood protection for consumers.
This reduction follows Flood Re’s decision not to increase premiums in line with inflation in 2018.
“Our purpose is to make home insurance both more affordable and more available for those people living in high flood-risk areas,” said Andy Bord, Chief Executive of Flood Re.
“I am delighted to start the New Year by making home insurance more affordable for those most at risk of flooding.”
“More than 200,000 properties have benefitted from Flood Re since it was launched and these reductions will help even more people to protect their homes and possessions.”
“Our consultation with the insurance industry suggests that these changes could save their customers as much as £112 a year on their home insurance. Householders should always shop around to get the right deal for them.”