Premiums charged by Flood Re to insurers are set according to Council Tax bands, and from the start of 2019 they will be reduced by 12.5% for buildings and 33% for content. This means a reduction of between GBP 44 and GBP 112 for combined building and content policy.
Flood Re consulted with seven major insurers - responsible for two-thirds of Flood Re's overall distribution and analyzing more than 6.9 million test records - to assess the effects of reducing reinsurance premium charges. While the end-price charged to consumers is decided by individual insurers, the analysis anticipated that a reduction in reinsurance premiums would result in reduced prices for consumers.
The analysis also found that a significantly greater percentage cutback was appropriate for content premiums compared to buildings.
The present announcement follows Flood Re's decision not to increase premiums in April 2018 in line with inflation.
Andy BORD, Chief Executive of Flood Re, said: "Our purpose is to make flood cover as part of home insurance more affordable and available. I am delighted today to announce that we will help to make flood cover even more affordable for those most at risk of flooding by reducing our premiums."
"Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future. Flood Re was encouraged to note the results of our consultation, confirmed across the market, that our premium reductions will result in lower premiums for consumers."
"Therefore, if some households in flood-prone parts of the country have previously not take out home insurance for cost reasons, we hope that this move may encourage them to obtain cover. Consumers should always shop around to get the right deal for them."
Flood Re is a re-insurance scheme that makes flood cover more widely available and affordable as part of the home insurance for homeowners whose houses are placed in flood prone areas. Flood Re also provides information about taking action to reduce flood risk. The scheme will run for 25 years, at which point insurers should be offering policies based on actual risk to property.