Guy Carpenter and Marsh push ahead with pooling solution for UK flood risk
Project Noah, a pooling solution for UK flood risk proposed by Guy Carpenter and Marsh, is pushing ahead despite insurer support for a rival plan from the ABI.
Speaking to Insurance Times sister publication Global Reinsurance, Guy Carpenter’s head of UK and EMEA sales operations Chris Klein said: “The discussions and planning continues.”
He said the project was “absolutely” alive and well, adding: “We have got people dedicated to that project in Guy Carpenter.”
Marsh and Guy Carpenter revealed plans for Project Noah last November, which proposes pooling the insurers’ flood risks and transferring them to the global reinsurance market.
It is designed to replace the Statement of Principles on the Provision of Flood Insurance agreement between the ABI and the UK government.
The agreement meant insurers would provide affordable flood cover in high-risk areas of the country, provided the government spent money on flood defences.
The Statement of Principles is due to expire on 1 July 2013, potentially leaving hundreds of thousands of homes in UK flood-prone areas without cover.
The ABI has submitted a rival proposal to Project Noah, Flood Re, that also involves a pooling mechanism.
It suggests an agreed entry premium for the pool, where insurers could choose whether to submit the risk to Flood Re for that price, or write it more cheaply themselves.
The government would top up the funds in Flood Re by levying all home insurance policyholders in the country.
Klein’s statement comes just days after the Department for Environment, Food and Rural Affairs (Defra) under-secretary of state Richard Benyon said the department was still deciding which proposal to choose.
In a written answer to a question from Tory MP Nigel Adams on the issue last week, Benyon said: “A number of options are under consideration, including an industry-led levy that would allow policyholders in high flood-risk areas to continue to secure affordable insurance without having an impact on bills.”
The ABI criticised Project Noah when it launched, but in April this year the property committee chairman and Ageas chief executive Barry Smith called for further talks to see if the industry could blend the ABI’s plans with Guy Carpenter and Marsh’s proposal.
We say …
● Defra has been secretive about the progress of the flood discussions, which makes it seem like it has a weak grasp on the issue.
● The department’s former boss, Caroline Spelman, was ousted in last week’s parliamentary reshuffle. This is unlikely to help speed up the flood talks.