Flood Re, the UK government-backed reinsurance scheme that aims to improve access to affordable flood insurance for at-risk households, has set out a series of reforms to mark its tenth anniversary of operation.
The group said the changes aim to make insurance affordable and viable in the long term, while placing greater focus on reducing flood risk and improving the resilience of UK households.
As part of the announcement, Flood Re said it would cut the premium charged to insurers from £52 to £25 for council tax Class A and Class B content-only policies from April 2027. Flood Re describes the change as a targeted measure to support low-income households and renters, and expects insurers to pass on reduced costs to customers.
Flood Re said the package of reforms was designed to further tilt the scheme towards those most in need of support, while tackling rising flood risks and rising claims costs linked to climate change. The organization also noted that the program is scheduled to end in 2039, meaning the next phase will focus on preparing insurers and customers for the long-term transition.
Flood Re says it has supported more than 742,000 households in accessing affordable flood insurance since its launch in 2016. The organization said this improved financial protection for households in flood-affected areas and helped maintain the confidence of buyers, lenders and owners in high-risk areas.
Flood Re said costs had continued to rise in recent years, with repair spending patterns showing that in three of the past four years claims payouts related to council tax-rated G and H-rated homes (which account for less than 4% of UK properties) were higher than those for A and B-rated homes (which account for around 45% of the housing stock). The group says this reinforces the need to redirect support.
The reforms have been developed in conjunction with the Department for Environment, Food and Rural Affairs (Defra), with Flood Re saying both agencies intend to ensure the development of the scheme remains fair, focused and financially sustainable. The government also said it would work with Flood Re and the insurance industry on possible changes to premium structures and claims processes to improve targeting and long-term stability.
Flood Re says a core element of the next phase is a greater emphasis on resilience at the property level. The organization is working with insurers, lenders and industry partners to develop a Flood Performance Certificate that will provide a recognized measure of a property’s ability to withstand flooding. Flood Re compares these certificates to energy performance certificates, noting that they are designed to help homeowners understand risk and encourage increased resilience, which can be reflected in insurance pricing.
In addition, the Flood Reinsurance Program offers discounts on insurance premiums for homes that hold a Flood Performance Certificate or complete a similar assessment. The organization said the move was aimed at encouraging practical measures to reduce the likelihood of flooding.
Flood Re also said it would expand its Build Back Better scheme, which supports homes to make improvements during flood repairs. The scheme provides funding of up to £10,000 to take steps to make homes more resilient as they recover and rebuild after flooding. Flood Re added that it is encouraging insurers to engage more broadly in offering this approach and if it is not offered, claims caps within the scheme will be adjusted.
Bridget Rosewell, Chair of Flood Re, commented: “For a decade, Flood Re has helped ensure that households at greatest risk of flooding have access to affordable insurance and the peace of mind that comes with it. This is an achievement that everyone involved in the scheme can be proud of.
“Looking ahead, it’s vital that support remains focused on those who need it most. That’s why we’re announcing today that we will reduce premiums for content-only policies in council tax bands A and B by more than half, helping to reduce costs for low-income households and renters, while ensuring protection is still available.
“At the same time, climate change means we must go further than just affordability. Through measures such as Flood Performance Certificates and Build Back Better, we are helping households become more resilient before floods occur, supporting a stronger and more sustainable flood insurance market in the future.”
Floods Minister Emma Hardy MP added: “Floods are truly devastating, turning lives upside down and leaving families facing huge uncertainty, which makes access to affordable insurance even more important.
“Over the past decade, Flood Re has transformed this access. Previously, many people faced unaffordable premiums or no access to insurance at all, but thanks to this initiative, access is now universal, even in the highest risk areas.
“In light of these new reforms, this government is working with Flood Re and industry to further refine our approach. By lowering premiums and making wider changes, we will ensure the scheme is more targeted in its second decade to support equity and ensure more low-income households get the support they need.”
Aviva Group Chief Executive Dame Amanda Blanc said: “I’m delighted that Flood Re has agreed to reduce contents insurance premiums for homes in Council Rate Bands A and B, which was a key recommendation in the independent review of flood insurance I carried out for the government in 2020.
“Reducing premiums for these levels of content-only coverage will help improve affordability and allow low-income households in high-risk flood areas to access the important protections that coverage brings.”
Graham Brogden MBE, representing the International Property Flood Protection Association (IPFRA), said: “It is encouraging that we are focusing more on making flood insurance more affordable for those on the lowest incomes, who are often the most vulnerable to flood risk. Reducing the cost for these households, while investing in practical flood defenses, is an important step forward.”
“The commitment to a pilot Flood Performance Certificate is particularly welcome and helps to recognize and incentivize action to improve resilience at a property level. Combining affordability and resilience in this way will be crucial to creating a more sustainable approach to flood risk management in the coming years.”
