It is being offered to the reinsurance market as a series of recent developments show that Flood Re is on track to accept its first policy in April 2016. They include:
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A detailed business plan has recently been submitted to the UK’s financial regulators – the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) – for regulatory approval. This is subject to the assessment of the regulators.
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The details of the testing process with insurers are on course to be released to the industry in the near future.
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The regulations to establish Flood Re have been approved by Ministers for scrutiny in Parliament to now begin.
These combined measures are crucial steps towards ensuring that approximately 350,000 homes in the most flood prone areas are able to access affordable flood insurance cover. Flood Re is subject to regulatory approval.
Brendan McCafferty, Chief Executive of Flood Re, commented:
“Flood Re is a complex scheme and we are pleased with the progress which is being made. Flood Re has plans in place and is on course to accept its first policy, but there is still a lot to do.
“The systems we are creating need to be tested thoroughly if we are to get it right first time for UK home insurance customers at risk of flooding, regardless of how they buy their cover. This means testing with potentially hundreds of companies in the insurance market.
“While this is an on-going process, the start of our reinsurance procurement and the submission of our application to the financial regulators represent two huge steps towards Flood Re becoming a reality. With the regulations now ready to progress through parliament, we will be working closely with the Secretary of State and her team at Defra, as well as relevant MPs and peers, to ensure the remaining legislation to launch Flood Re is agreed as soon as possible.”
Russell Higginbottom, CEO of Swiss Re UK, said:
“Swiss Re is very supportive of this type of initiative, which aims to ensure the provision of affordable flood cover to individuals. We are pleased to see that the UK is tackling the issue in this country and strengthening people’s ability to recover from the financial impact of flood losses. The cooperation between Government and the insurance industry is an excellent model for closing the flood protection gap.”
Until Flood Re accepts its first policy the current Statement of Principles agreement between ABI members and Government will remain in place for households at risk of flooding.
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