Marsh set to tackle flood cover with private-backed initiative ‘Project Noah’

Marsh is preparing to launch a groundbreaking project to ensure a continued provision of insurance in flood-risk areas that does not rely on financial backing from the cash-strapped government.

Under the global broker’s private sector-backed Project Noah initiative, insurers would be invited to place the flood risk elements of their household books into a central pool, which will then seek reinsurance. The pool would be administered by Marsh and its sister company reinsurance broker Guy Carpenter.

Marsh claims it has sufficient ‘critical mass’ of insurers to press forward with the project and that there is appetite among reinsurers
to take advantage of the fresh opportunities that the arrangement would create.

The initiative is due to be launched in the middle of next year, in anticipation of the end of the ABI’s statement of principles agreement in July 2013, under which insurers have agreed to continue to offer flood insurance as part of standard buildings and contents packages.

Marsh and Guy Carpenter, together with specialist residential property information provider Landmark Information Group, have
created a pricing model using Guy Carpenter’s catastrophe modelling tools. The model can price flood risks down to individual property level.

Marsh and Guy Carpenter have presented Project Noah to Treasury officials, who have been encouraging.

Marsh senior vice-president, risk management practice, Hutton Swinglehurst said: “We believe that this is one road to affordable insurance [in flood-risk areas] that is widely available and equitable.”

Biba head of corporate affairs Graeme Trudgill welcomed Project Noah. He said: “This is a broker-led solution that the government should consider seriously because they have to think carefully about how they respond to the end of the statement of principles.

“If this means that insurers are able to continue to offer flood cover, brokers will be happy with that.”

The initiative was also welcomed by environment select committee chair Ann McIntosh, who described it as a “potentially exciting project”.
The ABI, which has recently met with environment secretary Caroline Spelman, is continuing to push its own proposal for a flooding risk pool, but wants the government to back any such arrangement as a funder of last resort.