Households in the United Kingdom may soon require Flood Performance Certificates (FPCs) to access affordable home insurance. Flood Re, a government-supported reinsurance scheme, is collaborating with insurers, lenders, and industry partners to develop these certificates, which would serve as "a trusted assessment of a property's flood resilience."
The FPC initiative aims to provide homeowners with a clearer understanding of their flood risks and encourage investments in property resilience. Similar to Energy Performance Certificates (EPCs) required for selling or letting homes, FPCs would likely use a rating system to band properties based on their flood resilience. Flood Re has indicated that discounts may be offered to households that obtain an FPC or complete an equivalent self-assessment, thereby rewarding proactive measures to protect homes.
In addition to the FPC development, Flood Re plans to reduce premiums for contents-only policies in council tax bands A and B from £52 to £25, effective April 2027. This measure is intended to assist lower-income households and renters, with the expectation that insurers will pass these cost savings on to consumers. Flood Re noted that in recent years, it has incurred higher repair costs for homes in council tax bands G and H compared to those in bands A and B, despite the latter comprising a significantly larger proportion of UK homes.
Perry Thomas, chief executive of Flood Re, stated that the scheme has been increasingly subsidizing higher-value properties, with insurance claim costs for such homes surging. Flood Re currently has limitations on increasing premiums beyond the rate of consumer price index inflation. As premiums for high-value properties are already reaching this threshold and claim costs are rising faster than inflation, Flood Re is exploring options for greater premium increases and potential caps on claims.
Furthermore, Flood Re is strengthening its "Build Back Better" initiative. This program supports households in making resilience improvements during flood repairs, offering up to £10,000 for such measures. Flood Re is encouraging broader insurer participation in this approach, aiming for resilient reconstruction to become standard practice following a flood. The scheme will incentivize insurers to offer this program, with a lower claims cap if it is not provided to affected households.
Bridget Rosewell, chair of Flood Re, emphasized the importance of focusing support on those most in need. She highlighted the reduction in premiums for contents-only policies in lower council tax bands as a means to reduce costs for lower-income households and renters, ensuring continued protection. Rosewell also stressed that, with climate change impacts, affordability alone is insufficient, necessitating measures like FPCs and Build Back Better to enhance household resilience and foster a more sustainable flood insurance market.
Floods minister Emma Hardy MP acknowledged the devastating impact of flooding and the critical need for affordable insurance. She stated that the government is collaborating with Flood Re and the industry to evolve their approach, with reforms aimed at improving the scheme's targeting for fairness and ensuring more low-income households receive necessary support. Flood Re is funded through a tax on home insurers and a fixed charge for properties utilizing the scheme.