Although it was originally presumed the project would launch this summer, the scale and complexity of developing and implementing the system has been blamed for its launch being pushed back.
The project has been in the works since June 2013 but it took until January this year for the insurance industry and government to reach an agreement on how the scheme would work.
Brendan McCafferty, chief executive of Flood Re, told The Mail on Sunday: “This is the first time we have said this publicly. It’s vitally important to get this right first time as it is a world first.”
Flood Re is designed to help people afford to properly insure their homes against flooding.
Instead of paying incredibly expensive premiums in at-risk areas, or being denied insurance altogether, residents will be able to protect their home for a fixed annual fee on top of their policy premium.
This fee varies dependent on council tax band of their property, ranging from £210 for Band A housing all the way up to £1,200 a year for Band H (Band I in Wales) with a standard excess of £250 for a flood claim.
While insurers will still cover the risks of non-flood events, such as theft or fire, they ‘pass on’ the risk of a flood to a collective fund, where the money from all customers using Flood Re is held.
This pot will then be used to pay customers their claims in the event of flooding.
Residential properties built since 2009 will not be eligible to be covered by the Flood Re scheme. Commercial properties, including leasehold properties, will also not be included.
The scheme has been criticised for the exclusions of these properties among others, but the Association of British Insurers (ABI) says that homes built after 2009 are intentionally not covered so as not to encourage building in high-risk areas.
Professor Krebs, of the Committee on Climate Change, criticised the scheme in February as being “needlessly expensive” and called the inclusion of council tax bands H (and I in Wales) a “retrograde step”.
He also criticised the scheme for not encouraging people to implement flood defences.
The pooled money will be supplemented by a notional average of £10.50 a customer, says the ABI, but it insists that this won’t add anything to your bills if you’re not living in an area at risk of flooding. It states that “customers already pay the equivalent amount to cross-subsidise high flood risk,” and the levy is a formalisation of this arrangement.
Lexelle offers a range of added value products, including Home Emergency Solutions, to provide enhanced levels of cover for existing personal lines clients: