Flood Re Flashcards
Across the UK one in six homes is considered to be at significant risk of flooding.
True
In 2008, following extensive flooding across the UK in the summer of 2007, insurers subscribed to the :
ABI Revised Statement of Principles on the Provision of Flood Insurance.
ABI Revised Statement of Principles on the Provision of Flood Insurance was agreed with the Government.
True
This agreement was due to end in June 2013; however, it was extended until a new pool could be set up to cover the cost of flood insurance for homes.
True
How was Flood Re was created?
Following the Water Act 2014 and the Flood Re Reinsurance (Scheme and Scheme Administrator Designation) Regulations 2015.
Flood Re is a non-profit fund, similar ?
to Pool Re.
What is Pool Re?
set up for terrorism following IRA bombings in the 1990s.
Flood Re is
a reinsurance company.
Who is Flood Re owned and managed by?
insurers, funded by levies on member insurers.
How much is the total annual levy?
£180 million
The individual insurer levy is based on?
the insurer’s share of the home insurance market.
The cost of this levy is passed on to home insurance policyholders with those at the highest risk of flood contributing the most.
True
Why is the cost of this levy passed on to home insurance policyholders with those at the highest risk of flood contributing the most?
To ensure affordability, the individual cost that a high-risk policyholder will pay is based on the council tax band for their property, and the charges per council tax band are set out in legislation.
What is the aim of Pool Re?
To ensure that properties at significant risk of flood can still benefit from access to affordable flood cover without punitive excesses and/or barriers to indemnity.
The frequency of storm and flood events, even in the last five years, saw properties affected by such events and will need affordable insurance cover, if not by the policyholder, then almost certainly as a contractual requirement of any mortgages or loans secured against them.
True
Flood Re ONLY covers eligible residential properties, mainly homes.
True
It will not cover:
businesses (including SMEs); or properties built after 1 January 2009.
Flood Re has been set up to cover the vast majority of flood claims.
True
Flood Re
If the pool is impacted by significant flood events, the Government will step in as insurer of last resort.
True
Flood Re
As with Pool Re, the Government will ONLY cover the cost initially; any monies paid will be recovered from the pool over future years.
True
Flood Re
The scheme is due to run until 2039.
True
Flood Re
The restriction in the availability of Flood Re has seen some individuals in the market change residential lease agreements to make them eligible to access Flood Re via members.
True
Flood Re
It has ALSO led to several specialist insurers and managing general agents (MGAs) marketing policies specifically designed to cover the level of excess that can now be levied on proposers not eligible for Flood Re.
True
Flood Re
These excesses are the level of risk customers retain themselves and can be tens or even hundreds of thousands of pounds.
True
Flood Re
In some instances, they take the form of co-insurance, where the customer bears a proportion of any one loss as their excess, subject to a monetary minimum (e.g. 10% of any loss, or £10,000, whichever is the greater amount).
True
Flood Re
