Currently showing: Climate/natural disasters > Floods/storms


02 Feb 16 11:09

Given the UK floods we have had in recent months, it was great to see the latest Flood Re commentary in today's Financial Times (subscription required). Flood Re has announced that it has completed its reinsurance programme, one of the largest natural peril schemes globally, thereby achieving a milestone for the scheme's launch date in April this year. 

It will be welcomed in particular by many individuals in the UK whose homes and communities have been disrupted by flood. Insurance plays a vital role in strengthening people's ability to recover from the financial loss of flooding but if you look at the European picture there is a long way to go before the flood protection gap is closed. Europe-wide, while losses from natural catastrophes have risen significantly over the last three decades, on average only about half of natural catastrophe losses in Europe are insured.

Starting from April when Flood Re is launched, affordable flood cover will be available to hundreds of thousands of individuals at risk across the UK and in the long term making the UK significantly more resilient against future flooding. The cooperation between the UK Government and the insurance industry on Flood Re is an excellent model for closing the flood protection gap, with Swiss Re one of the reinsurers providing support. 

Flooding affects hundreds of millions of people around the world every year however awareness around the risks remain generally low. Population growth, demographic change, a higher concentration of assets in exposed areas and greater vulnerability of insured objects, as well as climate change, are all contributing to the increasing costs of flood damage. The Flood Re scheme is a concrete response to closing the flood protection gap in the UK, and eventually across Europe. 

Could this scheme be replicated in your market with flood or other natural perils? Share your thoughts with us!


Category: Climate/natural disasters: Floods/storms

Location: United Kingdom


1 Comment

Duncan Minty - 17 Mar 2016, 12:13 p.m.

FloodRe will indeed bring many benefits to many policyholders, but with PRA approval still outstanding (!!!) and less than half of household GWP ‘on board’ for the 4th April launch (even more !!!), the scheme is heading towards a somewhat fractured start.

Next month will see commentators exploring the implications that could flow from FloodRe and this will undoubtedly include questions about fairness and transparency. There are five ethical issues that I think the insurance sector needs to focus on vis-à-vis flood insurance, centred around transparency, premiums, boundaries, assumptions and governance – rather than detail them here, I'll point you to this post on my ‘Ethics and Insurance’ blog - http://ethicsandinsurance.info/2016/03/09/fairness-floodre/

Is this the right time to consider such issues? As a publicly accountable body, FloodRe will find that they won’t go away. Indeed, as the spotlight is turned on its launch, the scheme is likely to be challenged on them sooner rather than later.


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