UK flood insurance
Hi,
battlecard 29, Statement of Principles:
• insurers cover 1-in-75 year flood areas only if the government provides new investment
what does this mean exactly? insurer would cover areas with higher or lower probability of 1 in 75 years if government provides new investment?
also, battlecard 33 for UK flood insurance startup costs and reinsurance arrangements:
• purchased reinsurance to cover 200-yr flood event & (insurers not liable beyond this level)
is the reinsurance covering events more frequent than 1 in 200 years or less frequent?
Thank you
Comments
Insurers would only continue to cover regions with a greater than 1 in 75 year flood probability if the government improves infrastructure. Reinsurance will cover losses up to a 1 in 200 year event. For example, if a 1 in 200 year event causes 1B of losses, then participating insurers will not be liable for losses beyond 1B.
just to rephrase to make sure i get it, so for "low flood risk areas" (probability of flood < 1 in 75 years) insurers would cover unconditionally, but for "high flood risk areas, insurers would cover unless there's new government investment?
for the reinsurance, I still don't understand, what's Reinsurance will cover losses up to a 1 in 200 year event. does it mean that if risk is more frequent than 1 in 200 years then reinsurance will cover the excess of loss, but it's less frequent then there's no reinsurance?
To your first point, it should be wouldn't cover unless there's new government investment. Also, I wouldn't say they are going to cover regions with a smaller than 1 in 75 year probability of a flood unconditionally - but coverage is there.
Every once in 200 years, you will have a loss of say 1B. Reinsurance will share in the loses up to 1B. Following that, participating insurers are no longer liable for losses above 1B and the government will step in to discuss with flood re how to handle distribution resources for losses in XS of this. It's about severity not frequency here