New Year heralds lower insurance bills for homes most at risk of flooding

HOMEOWNERS whose properties are at greatest risk of flooding should benefit from lower insurance premiums in the New Year.

The welcome move, which should see a reduction in annual home insurance bills of between £44 and £112 for 200,000 homeowners, is a result of a decrease in the levy imposed on insurers by the Flood Re scheme. This was set up by the insurance industry and the Government in April 2016 to help those living in flood-risk areas obtain affordable home insurance – and to have greater choice over who provides cover.

In the past homeowners paid over the odds because insurers factored in the high probability of future flooding into premiums. Many refused to provide cover, limiting choice.

Some 46 insurers provide cover under Flood Re, including Aviva, Halifax and NFU Mutual. They pay £180 million a year into the scheme. Then, when there is a flood-related claim, the insurer can turn to Flood Re to draw upon the scheme to meet it. From January, the amount insurers pay into the scheme will fall, resulting in lower premiums for homeowners who have Flood Re backed cover. Andy Bord, Flood Re chief executive, said: ‘I am delighted to start the New Year by making home insurance more affordable for those most at risk of flooding.’

There is no obligation for insurers to pass on the benefit of the lower Flood Re costs to policyholders. Early indications suggest insurers will not try to profit from the move. NFU Mutual said it had amended its prices for home insurance to its 3,500 policyholders living in flood risk areas from the start of the year. But customers, it confirmed, will not benefit until their policy comes up for renewal.