Defra publishes draft Flood Re legislation

The government has published draft legislation for Flood Re, the mechanism that will ensure provision of flood insurance to high-risk homes.

There will now be an informal consultation on the draft clauses, published by the Department for Environment, Food & Rural Affairs (Defra) this morning. The deadline for responses is 20 September.

The publication of the draft clauses follows a formal six-week public consultation. Defra had intended to publish the draft clauses in time for the formal public consultation, which ran from 27 June to 8 August.

Water Bill update

The final clauses will be inserted into the Water Bill, published on 27 June, where there is currently a placeholder clause for Flood Re.

The rules aim to establish Flood Re, a fund that will help pay claims for homes at a high risk of flooding. Flood Re will be funded by charging homeowners a levy on their insurance policies.

The draft rules also aim to establish reserve powers, known as the Flood Insurance Obligation policy. These powers would regulate the insurance industry by requiring insurers to cover a certain share of the UK’s high-risk flood properties.

Reserve powers

According to Defra, these reserve powers are needed in case Flood Re proves unworkable and if free-market pricing proves unacceptable.

Parliamentary under-secretary for natural environment, water and rural affairs Richard Benyon said: “I am grateful for the comments and evidence provided during the public consultation.

“We received a positive response and are considering the comments carefully. We will publish our response in parallel with drafting the clauses for inclusion in the Water Bill by government amendment at committee stage.”