Guest post by Miranda Sharp, Head of Commercial Business, Ordnance Survey
The industry and the Government have been working tirelessly over the past 24 months to agree the replacement for the Statement of Principles that allows affordable flood cover for all. However, now the Water Bill has received Royal Ascent; the real hard work is about to begin on Flood Re as the enabling legislation is in place. The Flood Re scheme will allow owners of flood-prone homes to buy affordable insurance, where annual premiums will be capped and payouts for flood damage will come from a central pool of money. Homeowners will continue to buy home insurance in the normal way through insurers or brokers, but their insurers may choose to include their homes into the scheme.
The industry, politicians and the media have been discussing some of the exclusions at length, including the Association of British Insurers (ABI) putting a case for the inclusion Council Tax Band H properties. In light of this discussion, Ordnance Survey, in conjunction with POST have commissioned a report find out where concerns with Flood Re lie. The research asked a range of experts across the insurance market along with 120 professionals for their views on Flood Re.
Almost two thirds found Flood Re was the favoured solution; however 40% feel unconfident that the deadline of summer of 2015 is achievable – with experts including the ABI confirming the deadline is ‘highly ambitious’ and ‘that everyone is working very hard to meet a summer 2015 implementation date’. The research goes on to ask about the current status in the market and the changing role of the broker. Register to the download the full report.
But while Flood Re is an Industry and Government negotiated framework, the process of ceding a residential property into Flood Re will require individual insurers to act in a competitive market place and make their own risk assessments on individual properties for new quotes and existing business. Data and modelling will as ever be crucial to support those decisions. Insurers need to make sure they are using an accurate and up-to-date geospatial addressing dataset in combination with a flood model; to ensure they understand exactly where the property is, the degree of flood risk and whether it is in scope for Flood Re. A single consistent view of a particular property is vital and the use of a property reference number will help this process.
So whilst the industry works together with the Government to thrash out the final details of Flood Re; insurers need to prepare by ensuring they have a detailed understanding of flood risk – using models that draw on the latest data, including accurate addressing.