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In an important move for the insurance market in the UK, Flood Re has today announced that it will be reducing the premiums it charges to insurers beginning next year.
In its annual report, published today, it pointed to reviewing the premium and, on consultation with insurers, it has commenced that process which it states will “conclude in September.” It is said to be considering a range of reductions for buildings and contents policies “in order to optimise the benefits of the scheme.”
“After two years of operations, we are pleased that the Scheme’s objective, of ensuring the availability of affordable home insurance for people in flood-prone parts of the UK, continues to be met,” said Andy Bord, chief executive of Flood Re. “Our careful management of the Scheme means that we have built up good reserves and so are well-placed to respond to any future flooding events.
“Our strong position means that we are in a position to reduce the premiums that we charge insurers in 2019. We are therefore consulting with the industry about the right level of reduction, as well as how the cuts should be allocated across buildings and contents policies. In the UK’s competitive home insurance market, we anticipate these premium reductions will be passed on to consumers.”
When the changes are finalised, insurers will be expected to implement them from January 01, 2019.
Flood Re confirmed that the announcement comes on the back of its decision not to pass on the annual increase to premium thresholds in April. It also made several other announcements within its annual report, including: increased volumes (150,051 policies had been ceded by March 31); and improved affordability with Customer Intelligence data showing four out of five householders with a prior flood claim saw price reductions of more than 50%. It also states it is in a strong financial position with GWP at £32 million, up from £28 million, and profits before tax at £134 million compared to £130 million a year earlier.
