‘Currently, people living in high risk areas, or those whose properties have already been flooded, have little chance of being taken on by another insurer,’ says Black.
‘If a flood victim has existing insurance, that provider must continue to offer it to them,’ he says. ‘What this means is that they are effectively trapped with a provider,’ he notes.
The new scheme will make home insurance more accessible to people who are struggling to insure a property at risk of flooding, or those who have already been flooded and find it difficult to switch provider.
Insurance companies will pay an annual fee to Flood Re, which will allow the scheme to take on the flood risk element of their policies. If the insurer chooses to pass on this element of the policy, they must pay an additional premium based on the customer’s council tax band.
Because the scheme is subsidised by the whole industry, the rates charged to insurers will be lower than they would normally be for a property with the highest risk of flooding.