So what’s Flood Re and how does it work?
Okay, now you’re an expert on reinsurance, let’s look at Flood Re.
Flood Re is simply a new reinsurer.
Rather than taking on all types of different risks like most reinsurance companies would however, Flood Re, will only take on home related flood risks from other insurance companies.
Flood Re works invisibly as far as you are concerned.
You will deal with your insurance provider as usual. You will pay your premium to your chosen insurance provider and you will receive payouts of claims from the same insurance provider
Behind the scenes though, your insurance provider is paying Flood Re a part of your household insurance premiums. Flood Re takes this money from a number of different insurers and in doing so, spreads the risk away from any single insurer.
Flood Re is managed by executives from the insurance industry with many years of experience. In order to manage its own affairs, it is free to further pass on some of this risk to other reinsurers if it so wishes.
Flood Re will also benefit from a new annual tax levied on all home insurers in the UK. This is expected to raise £180m annually for Flood Re. This will give it further security to meet any flood-related claims.
In the event that you claim on your home insurance policy for flood related damage, your insurance provider will pay you as usual and then reclaim the payment from Flood Re.