Household flood insurance

This note outlines issues relating to flood insurance within the United Kingdom (UK) and the establishment of the Flood Re (flood re-insurance scheme) scheme by the Water Act and subsequent regulations. In the context of increasing flood risk and the need of flood insurance at reasonable cost, the UK government and insurance industry have come to a new agreement in 2015 (Flood Re) with the aims of reducing risks and continuying the traditional risk insurance tools to an extent.

The main points of this agreement are:

a commitment by the industry to offer insurance in high risk areas at affordable prices;
the establishment of the Flood Re scheme run by the industry;
a guarantee that the government would be primarily responsible for losses due to ‘a catastrophic event’ that Flood Re could not meet;
and increased government spending on flood defences.