New builds should be included in Flood Re proposals

The admission that new-build homes and small businesses will not be covered as part of the impending Flood Re proposals has created a parliamentary split.

Parliamentary aide to the climate change secretary, Stephen Gilbert suggested it was “nonsense” that the Flood Re insurance scheme would not cover new-build homes, the Yorkshire Post reports.

Flood Re was established to ensure that homes at risk of flooding would have greater levels of insurance, yet does not include houses built after 2009 and small firms.

Flood Re, proposed in June 2013 aims to establish a fund that will help pay claims for homes at 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.

When the proposals were announed, the British Property Federation (BPF) said in a statement: “While welcoming the proposed Flood Re agreement between government and the insurance industry, to ensure residential property continues to have access to affordable cover, the BPF believes excluding SMEs – the backbone of the UK economy – from the proposals could lead to large hikes in insurance premiums and even some premises becoming uninsurable.”