Industry originally agreed to exclude high-value properties because of fears over parliamentary support

The ABI is now publicly backing the inclusion of band H properties in Flood Re, despite originally agreeing with the government that the UK’s highest value properties should be excluded from the scheme.

The insurance trade association is writing to environment secretary Owen Paterson to clarify the insurance industry’s support for including band H properties in the scheme.

Flood Re is due to go live in summer 2015. The Water Bill, which contains the legislation enabling the formation of Flood Re, is currently on its way through parliament.

Support fears

The ABI now supports the inclusion of Band H properties in part because of the winter flooding in the UK. It said the events demonstrated that flooding can affect people regardless of their council tax band.

It added that the band H exclusion was originally included in the Flood Re memorandum of understanding with the government because of concerns that the cross-subsidy in the Flood Re levy, which funds the scheme, would have been difficult to secure parliamentary support for.

The association now argues, however, that here is extensive cross-party support for the Flood Re levy mechanism, and so wants to make its support for band H inclusion clear.

ABI deputy director general Huw Evans said: “Ministers were initially concerned that it would be a challenging political issue to allow cross-subsidy from smaller to larger homes as part of the Flood Re levy.

“Now it is clear that the levy commands extensive cross party support, as the Water Bill reaches conclusion, we want to make clear that we think Band H should be included in Flood Re when secondary legislation gets underway.”

The ABI’s public backing for band H inclusion will please Hiscox chief executive Bronek Masojada, an ABI board member, who has been campaigning for some Flood Re exclusions to be scrapped.

Masojada wrote to the House of Lords at the end of March, describing Flood Re in its current form as a “sticking plaster for a gaping wound”.