‘Three strikes’ plan aims to encourage homeowners to protect properties against flood

Flood Re is planning a ‘three strikes’ policy to encourage homeowners at high risk of flooding to invest in protecting their properties.

Under the plans, policyholders would risk being ejected from the flood insurance scheme after their third claim if they had not done enough to invest in their property’s flood resilience.

Addressing brokers on a webcast hosted by underwriting agency Aqua yesterday, interim Flood Re chief executive Tom Woolgrove said Flood Re was discussing the plan with the Department for Environment, Food & Rural Affairs (Defra).

Woolgrove told brokers: “The government has a policy goal to ensure that those customers at the highest risk do invest in resilience. We are working with them to make sure that this is proportionate but creates some incentive for policyholders to take action.”

He added: “There has to be some limit on the number of flood claims that Flood Re can reimburse before a policyholder takes some element of responsibility towards resilience measures.”

Woolgrove said that after the first claim, Flood Re would encourage “and probably pay for” a flood resilience survey.

After the second claim, Flood Re would encourage the policyholder to implement resilience measures up to a certain financial limit. If this is not done by the time of the third claim, “essentially that policy will be unable to be ceded into Flood Re”, Woolgrove said.

He added that there was a role for brokers to advise policyholders on how best to protect their homes and stay in Flood Re.

He said: “I think you can add value to your customers, particularly in those high-risk areas or those that have had flood claims in the recent past, in terms of the actions they can take so that they can still continue to enjoy the protection that Flood Re presents.”