Flood Re has begun the process for outward reinsurance protection in one of the world’s largest global programmes.
For cover to £2.1 billion a year, the three- to five-year programme will be one of the five largest ‘natural peril’ reinsurance deals struck globally and the second biggest in Europe. Guy Carpenter is the reinsurance broker running the procurement process.
Flood Re is on track to accept its first policy in April 2016.
A detailed business plan has recently been submitted to the UK’s financial regulators—the Prudential Regulatory Authority and Financial Conduct Authority—for regulatory approval. This is subject to the assessment of the regulators.
According to Flood Re, the details of the testing process with insurers are on course to be released to the industry in the near future.
The regulations to establish Flood Re have been approved by ministers for scrutiny in Parliament to begin.
Brendan McCafferty, chief executive of Flood Re, commented: “Flood Re is a complex scheme and we are pleased with the progress which is being made. Flood Re has plans in place and is on course to accept its first policy, but there is still a lot to do.”
“The systems we are creating need to be tested thoroughly if we are to get it right first time for UK home insurance customers at risk of flooding, regardless of how they buy their cover. This means testing with potentially hundreds of companies in the insurance market.”
Russell Higginbottom, CEO of Swiss Re UK, said: “Swiss Re is very supportive of this type of initiative, which aims to ensure the provision of affordable flood cover to individuals.”
“We are pleased to see that the UK is tackling the issue in this country and strengthening people’s ability to recover from the financial impact of flood losses. The cooperation between government and the insurance industry is an excellent model for closing the flood protection gap.”
