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