IT is very early days to determine whether FloodRe Insurance is working in the UK, after all, it was only introduced earlier this month. But already we can see some indicators. This is The Property Insurer’s early view on FloodRe and Flood Insurance.
It’s good news you can buy the new FloodRe Insurance. We can see the tariff increase in other home insurance taking hold already. On my own seven let properties, all of them were more expensive than last year and the new FloodRe was being partially blamed. Not great for me but if you are at risk of flooding it’s good to know that the underwriters are doing their bit. If need they are doing their bit and it wasn’t an excuse to increase my price.
Perhaps the biggest flaw in FloodRe Insurance is the fact it doesn’t cover properties built from 2009 onwards. That removes a lot of potentially flood risk properties from its help. Presumably the Government’s flood defences are helping these properties. If the Government actually built more flood defences – or the ones it promised. We hear of plenty of communities waiting for the flood defences to be put in place despite years of waiting.
There appears to be a problem with FloodRe that is making it less appetising than other home insurance. Namely, the broker or underwriter has to fill in lots of new questions and tick plenty of boxes. It means that writing this business takes more time, effort and administration. And as we all know, time is money.
It is more profitable for a broker to sell three standard home insurance policies than the one FloodRe policy that takes the same time to complete. That’s common sense.
Here at The Property Insurer we are upbeat about FloodRe Insurance. We do think it will work in the medium and long term. It has a sound financial plan and will be funded. Whether those funds survive a major flood incident remains to be seen though. There’s a good reason they did not launch in September with the prospect of having to pay out over the winter looming and no funds to do so.
But overall these are teething problems and specialist FloodRe brokers will come to market and compete for the business. They will the up against specialist flood insurance providers and it will be interesting to see who offers the best deals. You can try both out by getting a quote from The Home Insurer as we have both on our panel.