It will not act as an insurer of last resort for scheme
The government will consult the insurance industry on the secondary legislation for Flood Re this summer, delegates at a flood forum hosted by broking group Lark were told this week.
The Water Act 2014, which gained Royal Assent in May this year, has set the stage for Flood Re to be created.
But the finer details, such as the scheme’s scope and exclusions, will be contained in secondary legislation.
The consultation will give the industry opportunity to voice its concerns about the Flood Re scheme, which is set to come into force in July 2015.
Industry participants have several worries about the scheme, in particular the proposed exclusion of properties in council tax band H from its scope.
Delegates at Lark’s flood forum were also told that the government will not act as an insurer of last resort for Flood Re – so it will not make up any shortfall in the scheme’s claims paying resources if they are exhausted.
Flood Re is funded by a levy of 2.2% of premium on all home insurance policies.
This sets Flood Re apart from Pool Re, the UK’s government-backed terrorism insurance scheme, where the government does act as insurer of last resort.
Delegates were also told that the insurance industry will be able to create products to fill any areas not covered by Flood Re,.
Lark Group divisional director Mark Daines said: “Flooding is clearly a major issue and Flood Re, in its current state, only addresses the tip of the iceberg. We are all determined to get Flood Re fit for purpose by July 2015 but we believe there are huge opportunities to find market solutions to issues such as the council tax band H properties which are presently excluded from the proposals, and the issue of properties built post-2009.”