Flood Insurance: Some solace for winter flood victims

Flood With large areas of Northern England still underwater, and more rain forecast to fall, it’s been a devastating Christmas for many UK homeowners. However, analysts have provided a glimmer of hope for flood victims by predicting that premiums won’t rise and that insurers will shoulder the financial burden.

The country has been battered by storms over the past month and the Met Office has confirmed that December was the wettest month since records began way back in 1910. The auditing giant PwC estimated the economic impact of the storms could top £2.5billion and insurers are bracing themselves for payouts in excess of £1.4billion.

With flood alerts still in place the overall bill is likely to keep on rising and damage could cost more than the £3billion made in payouts for the 2007 floods. It’s hardly surprising that the floods have also hit the stock market with share prices falling for major insurers.

Given the anticipated payouts; how can premiums remain unaffected? Firstly: insurance companies set aside funds for natural disasters and because global losses fell last year; there is money left in the pot. Secondly: competition amongst household insurers is fierce and premiums across the sector are actually falling. And finally: the government backed ‘Flood Re’ scheme comes into effect in April.

Flood Re is the product of five years’ work between the government and the insurance industry aimed at providing affordable cover for households in flood prone areas. It’s a ‘reinsurance’ scheme which allows providers to insure themselves against serious losses. By charging a levy on all household policies the industry can create a central pool of funds for flood claims; thereby mitigating risk and allowing providers to offer flood risk insurance at a sensible price.

Until recently severe floods were comparatively rare; often being described in the media as ‘once in a lifetime’ events. However, with a changing climate the country is flooding more frequently and flood risk insurance is more important than ever.

Quoteline Direct is an independent broker with more than 45 years’ experience and we can tailor a home insurance policy to fit your needs; whatever your individual circumstances. To find out more visit our flood risk home insurance pages or Tel: 0161 874 4171 to speak with a member of our team.


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