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🌊 '''Flood Re''' is a joint initiative between the UK government and the insurance industry, established by the Water Act 2014, that operates as a [[Definition:Reinsurance | reinsurance]] fund designed to ensure affordable [[Definition:Flood insurance | flood insurance]] remains available for residential properties at high risk of flooding across the United Kingdom. Before Flood Re's creation, a long-standing informal agreement — the Statement of Principles — between insurers and the government had kept flood cover broadly available, but its expiration left households in flood-prone areas facing prohibitively expensive [[Definition:Premium | premiums]] or outright coverage denial. Flood Re was launched in 2016 as a time-limited solution intended to operate until 2039, by which point the market is expected to transition to risk-reflective pricing supported by improved flood defenses and property-level resilience measures.

⚙️ The mechanism works by allowing participating [[Definition:Insurance carrier | insurers]] to cede the flood risk portion of eligible residential [[Definition:Home insurance | home insurance]] policies to Flood Re at a fixed, capped [[Definition:Premium | premium]] determined by the property's council tax band rather than its actual flood risk. This means a homeowner in a high-risk area pays a manageable flood insurance price, while the insurer transfers the concentrated flood exposure to Flood Re's pool. Flood Re funds itself through these ceded premiums plus a levy on all UK home insurers, and it purchases its own [[Definition:Retrocession | retrocession]] protection and maintains reserves to handle large loss events. Certain property types — including those built after January 1, 2009, and commercial properties — are excluded from the scheme, a deliberate design choice to avoid incentivizing construction in flood-prone areas.

📈 Flood Re has materially changed the dynamics of flood insurance availability in the UK. Industry data shows that the vast majority of households in high-risk areas now have access to competitively priced flood cover — a stark improvement over the pre-2016 landscape. Beyond its immediate market impact, Flood Re has become a closely watched model internationally. Countries grappling with rising [[Definition:Climate risk | climate risk]] and [[Definition:Natural catastrophe | natural catastrophe]] exposure, from Australia to the United States (where the National Flood Insurance Program faces its own structural challenges), study Flood Re as an example of how public-private partnerships can address [[Definition:Protection gap | protection gaps]] without fully nationalizing risk. Its planned sunset in 2039 also sets an important precedent: the expectation that [[Definition:Risk mitigation | risk mitigation]] and adaptation should ultimately replace subsidized transfer.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Flood insurance]]
* [[Definition:Protection gap]]
* [[Definition:Natural catastrophe]]
* [[Definition:Climate risk]]
* [[Definition:Reinsurance pool]]
* [[Definition:National Flood Insurance Program (NFIP)]]
{{Div col end}}

Definition:Flood Re - Revision history

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