Flood Re, the UK Government’s scheme to pool flood risk, has secured nearly £1.3 billion from some of the industry’s leading reinsurers, completing the first phase of its tender process.

Leading insurers including Munich Re and Swiss Re have contributed ‘very significant support’ with the three year programme being one of the five largest ‘natural peril’ reinsurance deals struck globally and the second biggest in Europe.

The procurement process involves the reinsurance broker Guy Carpenter and has now entered phase two, where a further £720 million of reinsurance protection is being sought.

This is expected to conclude in January 2016, which will ensure that Flood Re is on track to accept its first policy in April 2016 after Flooding Minister Rory Stewart MP signed the regulations approving Flood Re last week.

Flood Re Chief Executive Brendan McCafferty said the successful completion of phase one of the reinsurance procurement process is an important milestone on the road towards Flood Re becoming a reality.

“We are delighted by the strong demand within the reinsurance market, which saw the programme being significantly oversubscribed,” he said.

“This bodes well for phase two and means we are on course to provide protection up to the planned £2.1 billion annual liability limit.

“Flood Re is a complex scheme and while we are pleased with the progress which is being made, we are not complacent. Plenty of hard work remains ahead of us.

“Over the next few months we need to ensure that every insurer who wishes to test with Flood Re is able to do so, that we successfully complete phase two of the reinsurance process and that we continue to work closely with the financial regulators.”

Charles Whitmore, Managing Director and head of Guy Carpenter’s Property Solutions Group, added: “The reinsurance market’s response to this major opportunity has been very impressive, with carriers showing a strong appetite to work with the public sector to ensure affordable flood cover will be made available to UK households.

“The process has been conducted in accordance with the European Public Procurement regulations which we believe is a first in the UK for the procurement of reinsurance cover.”

In July 2015 Flood Re submitted an application for authorisation to the UK’s financial regulators – the Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) – for their assessment. Flood Re will need to be authorised by the financial regulators before it can start accepting business.

Until this point, the current Statement of Principles agreement between ABI members and Government will remain in place for households at risk of flooding.

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