Over £1.25 billion has been raised in the first stage of the setting up of the Flood Re fund.
The not-for-profit flood reinsurance fund, run by the insurance industry, is being set up to ensure that domestic properties in the UK at the highest risk of flooding can receive affordable property cover.
The oversubscribed first stage of process has given its developers confidence that it will secure its £2.1 billion target for the scheme to accept its first policy in April 2016 after Flooding Minister Rory Stewart MP signed the regulations approving Flood Re last week.
Some of the industry’s leading reinsurers have collectively offered £1.29 billion of cover a year – with leaders Munich Re and Swiss Re contributing very significant support. The three year programme is one of the five largest natural peril reinsurance deals struck globally and the second biggest in Europe.
The procurement process involves the reinsurance broker Guy Carpenter and has now entered phase two, where a further £720 million of reinsurance protection is being sought. This is expected to conclude in January 2016.
Brendan McCafferty, Chief Executive of Flood Re, commented: “The successful completion of phase one of the reinsurance procurement process is an important milestone on the road towards Flood Re becoming a reality.
“We are delighted by the strong demand within the reinsurance market, which saw the programme being significantly oversubscribed. This bodes well for phase two and means we are on course to provide protection up to the planned £2.1 billion annual liability limit.
“Flood Re is a complex scheme and while we are pleased with the progress which is being made, we are not complacent. Plenty of hard work remains ahead of us. Over the next few months we need to ensure that every insurer who wishes to test with Flood Re is able to do so, that we successfully complete phase two of the reinsurance process and that we continue to work closely with the financial regulators.”