Flood Re—a collaborative initiative between the UK government and insurers aimed at enhancing the affordability of flood insurance for homeowners—has experienced a dramatic surge in reinsurance premiums and claims-related expenditures.
“The global cost of reinsurance is increasing and Flood Re is facing more frequent and severe claims – including a rise in very large claims exceeding £100,000 [US$134,061] and even £1 million [US$1.34 million],” said Flood Re in a statement.
These claims trends have brought a £100 million (US$134.1 million) increase in the scheme’s annual reinsurance costs while “the amount of risk that it retains directly has nearly tripled,” Flood Re added.
Now in its tenth year, Flood Re reported that it has enabled over 660,000 households to obtain flood insurance since its launch. In the 2024/25 period alone, the number of policies ceded to the scheme jumped 20% to a record-high 346,200.
Flood Re attributed the growth to climate change which is “fundamentally altering the reinsurance landscape.”
As a result, the scheme must adapt to ensure its long-term sustainability, the statement added.
“The world Flood Re was designed for – one of predictable weather patterns, modest claims and accessible reinsurance – is rapidly disappearing,” commented Perry Thomas, CEO of Flood Re, in a statement. “Climate change has reshaped the risk environment, driving up costs and amplifying our exposure.”
Thomas said the scheme’s evolution must include revisiting how it is funded, how premiums are structured and which properties it should cover.
(Editor’s note: Flood Re currently reinsures homeowners flood risks but not commercial risks).
“These are complex but essential discussions if we are to preserve the availability and affordability of flood insurance for the long term. Bold action now will be critical to ensuring the scheme’s sustainability through to its planned conclusion in 2039,” he said.
Key Flood Re figures for the year to March 31, 2025 include:
- 346,200 policies ceded to Flood Re (up 20%),
- £13.5 million profit before tax,
- £159.6 million in claims paid – above average but down from 2023/24,
- Reinsurance liability limit raised to £3.2 billion,
- Net retention increased to £347 million under 2025-2028 program (£130 million under 2022-2025 program),
- 99% of high-risk households can now access quotes from 15 or more insurers.
Photograph: Residents wade through flood water in Loughborough, Leicestershire after rain and strong winds from Storm Henk lashed large parts of the UK, Wednesday Jan. 3, 2024. (Callum Parke/PA via AP)
Source: Flood Re
