Marsh's ‘Project Noah’ initiative to tackle flood cover

Marsh is preparing to launch a groundbreaking private sector-backed project called Project Noah to ensure insurance cover will contine to be provided in flood-risk areas.

The aim is to provide cover that does not rely on financial backing from the cash-strapped government.

Under the global broker’s 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 which 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 told Insurance Times: “We believe that this is one road to affordable insurance [in flood-risk areas] that is widely available and equitable.”

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.