Flood Re

Question 1

Across the UK one in six homes is considered to be at significant risk of flooding.

Answer 1

True

Question 2

In 2008, following extensive flooding across the UK in the summer of 2007, insurers subscribed to the :

Answer 2

ABI Revised Statement of Principles on the Provision of Flood Insurance.

Question 3

ABI Revised Statement of Principles on the Provision of Flood Insurance was agreed with the Government.

Answer 3

True

Question 4

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.

Answer 4

True

Question 5

How was Flood Re was created?

Answer 5

Following the Water Act 2014 and the Flood Re Reinsurance (Scheme and Scheme Administrator Designation) Regulations 2015.

Question 6

Flood Re is a non-profit fund, similar ?

Answer 6

to Pool Re.

Question 7

What is Pool Re?

Answer 7

set up for terrorism following IRA bombings in the 1990s.

Question 8

Flood Re is

Answer 8

a reinsurance company.

Question 9

Who is Flood Re owned and managed by?

Answer 9

insurers, funded by levies on member insurers.

Question 10

How much is the total annual levy?

Answer 10

£180 million

Question 11

The individual insurer levy is based on?

Answer 11

the insurer’s share of the home insurance market.

Question 12

The cost of this levy is passed on to home insurance policyholders with those at the highest risk of flood contributing the most.

Answer 12

True

Question 13

Why is the cost of this levy passed on to home insurance policyholders with those at the highest risk of flood contributing the most?

Answer 13

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.

Question 14

What is the aim of Pool Re?

Answer 14

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.

Question 15

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.

Answer 15

True

Question 16

Flood Re ONLY covers eligible residential properties, mainly homes.

Answer 16

True

Question 17

It will not cover:

Answer 17

businesses (including SMEs); or properties built after 1 January 2009.

Question 18

Flood Re has been set up to cover the vast majority of flood claims.

Answer 18

True

Flood Re

Question 19

If the pool is impacted by significant flood events, the Government will step in as insurer of last resort.

Answer 19

True

Flood Re

Question 20

As with Pool Re, the Government will ONLY cover the cost initially; any monies paid will be recovered from the pool over future years.

Answer 20

True

Flood Re

Question 21

The scheme is due to run until 2039.

Answer 21

True

Flood Re

Question 22

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.

Answer 22

True

Flood Re

Question 23

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.

Answer 23

True

Flood Re

Question 24

These excesses are the level of risk customers retain themselves and can be tens or even hundreds of thousands of pounds.

Answer 24

True

Flood Re

Question 25

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).

Answer 25

True

Flood Re