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20th January 2016


Flood Reinsurance Scheme

What is it?

The Flood Reinsurance scheme (Flood Re) is the system preferred by both the government and the Association of British Insurers to secure available and affordable insurance for homeowners whose properties are considered to be at high risk of flooding.

When will it be available?

The regulations to establish Flood Re came into force on 11 November 2015. Approval from the Prudential Regulation Authority is still required before Flood Re can offer flood cover and the timeframe for this approval process has not been set out. Despite this, insurers are already trialling the system internally and it is likely that Flood Re will commence business in April 2016.

What will it offer?

Flood Re is a reinsurance scheme with an intended life span of 25 years. The aim of the reinsurance scheme will be to provide commercial insurers with the opportunity to purchase subsidised reinsurance against flood risk where they are not prepared to underwrite that flood risk themselves.

Flood Re will offer:

-        Capped premiums (set by reference to the Council Tax band of the property and rising broadly in line with inflation); and

-        Either an initial maximum excess of £250.00 or, if higher, the excess which the commercial insurer chooses to apply to the policy.

Although, the details of the excess arrangement are currently only set out in a confidential document between Flood Re and the commercial insurers.

Availability of Flood Re

It is worth noting that Flood Re reinsurance is only available for certain types of property and will not available for the following:

-        All commercial property;

-        All residential property built since 1 January 2009;

-        All mixed use property (i.e. both residential and commercial);

-        All purpose built blocks of flats;

-        Buy-to-let properties where the landlord arranges the buildings insurance; and

-        Most houses that have been converted into flats.

Properties that fall outside the availability scope of Flood Re will instead be subject to market-driven premiums and excesses for flood cover.

As a result, prospective buyers or tenants of property are urged to establish whether their target property is at risk of flooding. In the event that it is, they should check whether it will fall within the scope of Flood Re. If the property does not, then they may wish to check what flood insurance cover would be available to ensure that its terms and cost will be acceptable.

Where property is for commercial and mixed use, special care should be taken and proper searches carried out before purchasing the property to determine whether it is in a flood zone. If this is an area you require assistance with, please do not hesitate to contact us on 01622 759051 or by email at

Written by Jonathan Masucci


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