Households in flood-prone areas could see their insurance costs reduced from next year, according to a scheme which helps to make affordable cover more widely available.
The Flood Re scheme, which launched in 2016, said it will cut the charges it makes to insurers – which in turn could make cover cheaper for households.
The scheme does not deal directly with households but sits in the background for insurers to make use of.
When households buy home insurance cover, insurers can choose to pass the flood risk element of the policy to Flood Re for a fixed price.
The scheme will then reimburse the insurer if they need to pay out on a claim.
The scheme has announced it will reduce the reinsurance premiums it charges to insurers from January 1 2019.
It said: “The decision is anticipated to reduce the costs of flood insurance cover for people most at-risk of flooding in the UK.”
However, Flood Re does not set the prices paid by households, and it said that is a decision for insurers to make.
It said the changes could mean a potential reduction of up to £112 for a combined buildings and contents policy.
The scheme said the reduction is in line with its purpose of making flood cover, as part of home insurance, more affordable and available.
A home insurance industry levy helps to pay the running costs of Flood Re.
The body said that over the first two years of operations, it has established a strong financial position and in a time when home insurance premiums have been flat or falling slightly.
Andy Bord, chief executive of Flood Re, said: “I am delighted today to announce that we will help to make flood cover even more affordable for those most at-risk of flooding by reducing our premiums.
“Our detailed analysis has found that we can reduce our charges to insurers, whilst maintaining a strong financial position and remaining able to respond to significant flooding in future.”
He continued: “If some households in flood-prone parts of the country have previously not taken out home insurance for cost reasons, we hope that this move may encourage them to obtain cover. Consumers should always shop around to get the right deal for them.”