FLOOD Re will reduce premiums it charges to insurers, for the first time, in 2019

4 July 2018 — Daniela GHETU
FLOOD Re's results for the year ended 31 March 2018 show a profit before tax of GBP 134 and GWP of GBP 32 million. For the first time, FLOOD Re will reduce the premiums it charges to insurers from the start of 2019.

The company manages net assets (IFRS basis) of GBP 208 million (2017: GBP 98 million) while Available and Eligible Own Funds (Solvency II basis) reached GBP 214 million (2017: GBP 100 million). Invested and liquid assets amount to GBP 257 million (2017: GBP 157 million).

Total gross claims paid in the reporting year amounted to CBP 2.51 million, the FLOOD Re Scheme paying the costs of all relevant flood claims back to insurers.

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One of the main strategic goals of FLOOD Re is to increase availability and choice of insurers for customers. In this respect, the company reported that currently availability has improved so that 100% of households who had made prior flood claims can get quotes from five or more insurers, 74% can choose from at least 10 insurers and 68% have a choice from 15 or more insurers. Before the introduction of FLOOD Re, fewer than one in ten could get quotes from two or more insurers, with none being able to get quotes from five or more.

To achieve this goal FLOOD Re provides reinsurance cover at a subsidized fixed rate to cedants, resulting in an expected underwriting loss each financial year. The Company finances this through the GBP 180 million Levy on UK household insurers. The Levy also finances the purchase of an outwards reinsurance program to protect the Company up to a GBP 2.133 billion maximum Liability Limit.

Since the introduction of FLOOD Re, four out of five householders with previous flood claims saw a reduction in the price of available quotes of more than 50%. 60 insurers representing 90% of the UK household insurance market participate in the FLOOD Re Scheme. 150,051 policies were issued in the reporting year.

In the coming year FLOOD Re will undertake one of the world's largest global single peril multi-year procurement processes for reinsurance, seeking to maximize both efficiency and value for money. Also, in consultation with insurers, FLOOD Re has commenced a process of reviewing premiums which will conclude by the end of September. Flood Re is considering a range of different reductions in the level of premiums for buildings and contents policies in order to optimize the benefits of the Scheme. Once the changes are confirmed, insurers will implement the necessary changes to come into operation from 1 January 2019. This announcement comes after Flood Re decided not to pass on the annual increase to premium thresholds in April 2018.

The full annual report of FLOOD Re is available here (https://www.floodre.co.uk/wp-content/uploads/Flood-Re-Annual-Report-2017-18.pdf)

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