Flood Re has reported a “strong” financial and operational performance for the financial year 2022/23, despite “soaring inflation, rising claims costs, and the remorseless march of climate change.”
Flood Re, the joint initiative between the UK insurance industry and the UK Government to promote the availability and affordability of flood insurance, disclosed a profit before tax of £110m for the year to the end of March 2023 (2022: £132m), reflecting a broadly benign year for flood events and a planned reduction in income raised from the Levy on insurers of 25% to £135m (2022: £180m).
According to Flood Re, the number of policies ceded to the Scheme increased by 3.6% to 265,826, with gross written premiums received rising to £52m, up from £46m last year.
Eligible own funds under the Solvency II Directive also rose to £693m.
“Given the high inflation environment, Flood Re was successful at mitigating the impact of inflation,” the initiative said.
Indeed, Flood Re increased its investment income to £14m for the financial year, compared to £0.3m in the preceding year.
Flood Re continued, “The year saw a major focus on adaptation to drive resilience and resistance across the UK’s housing stock.
“The Build Back Better scheme, launched in April 2022, promoting and funding Property Flood Resilience (PFR) gained widespread support during the year, with 63% of the UK insurance market committing to offer it as an option for customers.”
Despite these results, Flood Re suggested that much more investment in and education around adaptation to climate change is needed if the insurance market is to continue to provide affordable flood insurance against a background of increased flooding risk.
Andy Bord, CEO of Flood Re, commented, “Climate change is having and will continue to have a major impact on the UK with river, coastal and surface water flooding all on the rise.
“With over two million people across the UK already exposed to frequent flooding and the average cost of repairing a flooded home being in excess of £30,000, the time for action on adaptation to climate change is now.”
Bord continued, “Whilst government remains committed to investing in flood defences, there needs to be as much focus, if not more, on driving forward adaptation. That is why we launched the Build Back Better Scheme, are driving forward on plans for Flood Performance Certificates and have made the creation of a Centre of Excellence as priorities in our Transition Plan.
“Build Back Better has laid the groundwork for increased PFR take-up, with the potential to dramatically enhance property and community flood resilience and reduce costs. To fully realize its potential, we would like to see Build Back Better offered as standard in all home insurance policies for those living at high flood risk.”
The annual report also confirmed that Mark Hoban, Chair since Flood Re’s inception, and who successfully steered its creation, authorisation, and establishment, will step down in September after eight and a half years of “invaluable” service.
Flood Re stated that his replacement will be confirmed shortly.
