New flood insurance scheme "needlessly expensive"

Last month the Government and insurers reached an agreement on how a new pooled scheme to allow access to insurance against flooding for all would work.

But now, Professor Lord Krebs of the Committee on Climate Change has said that not only is the scheme "needlessly expensive," but the costs of Flood Re are three times the potential economic benefits.

Restricting the scope

In a letter to Flood Re Chief Executive Brendan McCafferty, Lord Krebs said that the scheme is set to subsidise "many hundreds of thousands of households more than the estimated number that might struggle to afford cover in a free market".

Covering homes in Council Tax Band H, which was one of the additions to the policy prior to the recent agreement between the insurance industry and politicians, was a "retrograde step" at this stage, he argued, and called for a rethink of how to best narrow the scheme as soon as possible.

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Focus on defence, not aftermath

Another issue with Flood Re is that it promises repayment in the event of flooding, rather than directly encouraging the implementation of secure flood defences to protect homes. Krebs argued that persuading people to invest in flood defences to reduce risk should be placed "at the heart" of Flood Re's transition plans.

Many high risk households are not aware that they live on a floodplain, and would possibly take action if better informed. This would mean they could reduce their premiums without the need for intervention. "Flood Re just postpones the problem," wrote Krebs.

Krebs told the BBC that there is currently "a risk that Flood Re will be counter-productive to the long-term management of flood risk in the UK, as it largely removes the financial incentive for households to take steps to avoid being flooded".

What to do if your home is at risk of flooding

The message here is essentially that prevention is better than the 'cure' - the long slog of piecing together a home following destructive flooding. Read Protect your home against flooding for more information and advice on which flood defences could cut your home insurance premium.

The Government also has a detailed guide on how to prepare for a flood, and advice for dealing with one and its after effects.

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