Flood Re (United Kingdom)
British flood reinsurance scheme aimed at maintaining the insurability of the most exposed homes.
Flood Re is a British scheme created in 2016 to maintain the affordability and insurability of home insurance for properties most exposed to flood risk. It operates as a not-for-profit reinsurer: insurers can cede the flood component of eligible policies to Flood Re at a capped rate, the scheme being funded by a levy on all home insurers. The aim is to prevent a minority of highly exposed households from being left without affordable cover. Designed as transitional to 2039, Flood Re seeks to accompany a shift toward risk-based pricing, while encouraging vulnerability reduction. For insurance, it illustrates a model of targeted pooling distinct from generalist catastrophe regimes, and raises the recurrent question of moral hazard: subsidizing insurance in at-risk areas can discourage adaptation and the avoidance of exposed development.
Since Flood Re began operating in April 2016, a British household in a flood zone can keep affordable home insurance thanks to its insurer ceding the flood risk to that reinsurer.
Flood Re, Flood Reinsurance, UK flood scheme
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