Homeowners in flood-prone parts of the UK could see their home insurance premiums fall by up to £112.
Little-known Flood Re, the government-backed re-insurer, is set to cut its premiums from 1 January 2019 by 12.5% for buildings and 33% for contents. It says as a result households in affected areas will see their premiums go down between £44 and £112.
Flood Re helps provide insurance cover to households more prone to flooding. It charges premiums to insurers and builds up a fund of £180 million for households at risk of flooding.
Insurers that identify households in at-risk areas pass on the added cost of cover to Flood Re, instead of charging the consumer. The Association of British Insurers (ABI) estimates that up to 350,000 households are eligible for help on their premiums from Flood Re.
The re-insurer spoke to seven major insurers and says that while prices are set independently by each, it expects the reduction in the re-insurance premiums it charges will result in lowers costs for homeowners.
Andy Bord, chief executive of Flood Re, comments: “Our purpose is to make flood cover as part of home insurance more affordable and available. I am delighted to announce that we will help to make flood cover even more affordable for those most at risk of flooding by reducing our premiums.”
“Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future.”
“Flood Re was encouraged to note the results of our consultation, confirmed across the market, that our premium reductions will result in lower premiums for consumers.”
“Therefore, if some households in flood-prone parts of the country have previously not take out home insurance for cost reasons, we hope that this move may encourage them to obtain cover.
However, price reductions are not necessarily guaranteed. Mr Bord urges: “consumers should always shop around to get the right deal for them.”
Sarah Cordey, a spokesperson for the ABI agrees: “The insurance industry created Flood Re to help people in high flood risk areas access affordable home insurance, and it’s working well. As winter approaches, anyone who’s previously had trouble shopping around for cover because of a flooding problem should know there are now a lot more options available and it’s worth checking again.”