Homes covered by Flood Re policies rise 20% to record high

By Rebecca Delaney

July 21 - (The Insurer) - The number of policies ceded to Flood Re increased by 20% to a record 346,200 in the year ended March 31, 2025, according to the reinsurance scheme's latests accounts filed on Monday.

Now in its tenth year, more than 660,000 households have secured cover to date through Flood Re.

Flood Re reported profit before tax of 13.5 million pounds ($18.1 million) for 2024/25, with a solvency capital ratio of 235%.

During the year, Flood Re paid claims totalling 159.6 million pounds, which it said was above average but down from the prior period.

Flood Re said the growth in policies reflects a rapidly changing risk environment as the global cost of reinsurance increases and the scheme faces more frequent and severe claims, including a rise in very large claims ranging from 100,000 pounds up to 1 million pounds.

As a result, Flood Re's annual reinsurance costs have risen by 100 million pounds, while the amount of risk that it retains directly has nearly tripled.

It said this backdrop has strengthened the case for further reforms to ensure that Flood Re remains sustainable in the long term.

Required changes may include premium adjustments, reforms to the scheme funding model and the scope of properties covered.

In March, Flood Re launched its inaugural catastrophe bond, Vision 2039, to enable access to the ILS markets and further diversify its reinsurance strategy.

It also agreed a new three-year funding arrangement with the UK government, increasing Levy I from 135 million pounds to 160 million pounds.

In addition, in response to increasing cost pressures, Flood Re announced its first mid-year premium adjustment, which will take effect from October 1, 2025. At the same time, the scheme’s statutory loss limit will increase from 100 million pounds to 250 million pounds.

The reinsurance liability limit was raised to 3.2 billion pounds during the 2024/25 year, with net retention increasing to 347 million pounds under the 2025-2028 program.

"The world Flood Re was designed for – one of predictable weather patterns, modest claims and accessible reinsurance – is rapidly disappearing," commented Flood Re CEO Perry Thomas.

"Climate change has reshaped the risk environment, driving up costs and amplifying our exposure. In response, we must urgently consider how the scheme itself needs to evolve. This includes revisiting how it is funded, how premiums are structured and which properties it should cover. These are complex but essential discussions if we are to preserve the availability and affordability of flood insurance for the long term."

Flood Re has called for a co-ordinated national effort to strengthen the UK’s long-term flood resilience. The Build Back Better scheme is now supported by more than 70% of the residential property insurance market and enables homeowners to access up to 10,000 pounds in funding for resilience measures following a flood.