Posts Tagged ‘strongest’

Flood Re

6457592orokqa9xFlood Re: A New Flood Insurance Agreement Reached. On 27 June 2013, it was announced that the Association of British Insurers (ABI) and the government agreed to a Memorandum of Understanding to help ensure that flood insurance continues to be affordable and widely available to hundreds of thousands of households in flood-prone areas. Environment Secretary Owen Paterson stated, ‘[w]e have worked extremely hard with the industry [ABI] to reach an agreement on the future of flood insurance. There are still areas to work through, but this announcement means that people no longer need to live in fear of being uninsurable and that those at most risk can get protection, now and in the future’. This memorandum is an agreement to replace the expiring Statement of Principles with a not-for-profit flood fund, to be known as ‘Flood Re’. The Statement of Principles was always intended to be a temporary measure until a more permanent solution could be developed. While there are still many details that have yet to be worked through, the framework for Flood Re has been established and implementation of the new scheme is tentatively set for the summer of 2015. The following provides some of the key elements of the agreed-upon Flood Re scheme.


Flood Re will be a not-for-profit fund run and financed by insurers in order to cover homes at high risk for flooding. Insurers will place these high-risk homes, ones that they feel unable to insure themselves, into the fund. Premiums will be capped based on Council Tax bands, thus creating a limit on how much flood insurance will cost for the homeowner. The capped premiums will start at £210 per annum for homes in Council Tax bands A and B, rising to £540 per annum for homes in Council Tax band G. These premiums, along with a levy on all household insurers of £180 million a year (averaged out as £10.50 per household policy), will go into the fund to help pay out any claims. However, Flood Re will also have certain exclusions. Homes in England’s highest Council Tax band, H, will not be included in the scheme, nor will equivalent properties in Wales, Scotland and Northern Ireland. Homes built after 1 January 2009 will also be excluded in order to avoid unwise building in high risk flood areas. Additionally, Flood Re appears to exclude to small businesses, differing from the current Statement of Principles. Therefore, once Flood Re is implemented, small businesses will likely have to obtain flood cover on the open market like medium and large businesses.


Until Flood Re becomes finalised and implemented, the ABI has stated that their members will voluntarily continue to meet their commitments to existing customers under the Statement of Principles. Flood cover will continue to be offered to: Domestic properties and small businesses where flood risks are not ‘significant’, generally defined as properties with no greater than a 1.3 per cent or 1 in 75 annual probability of flooding, and Domestic properties and small businesses where the government has announced plans and notified the ABI of its intention to reduce the flood risk to below ‘significant’ within five years. Premiums will continue to reflect the level of risk presented by the specific property, and properties built after 1 January 2009 are still excluded. This means that there will be no immediate change to current structure of flood insurance during this transitional period. Bromwall Ltd will keep you updated on any new developments as more information and details are released, and help ensure a smooth transition once Flood Re is implemented.

Call Bromwal Ltd on 01707 883377 or email us on to discuss.


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Is Your Insurance Cover Correct?

ID-10094997There are some Brokers and even some insurers who will provide an insurance quotation even though they must be aware that the cover they are providing is not fit for purpose. Business interruption is often miscalculated and under insured, and in the event of a major claim, leaving the client with a large loss which could result with the business failing. Brokers in order to compete with an existing renewal will try every trick to reduce the premium in order to gain the business. The client is completely unaware and quite happy to pay a lower premium. We have found that one way to reduce the premium is to quote business interruption on a gross profit representing 12 months when the existing indemnity period is 24 months. This can roughly reduce the premium by about 30% but in the event of a claim the client will be underinsured. Brokers will also obtain quotes on reduced turnover and wages. This leaves the liability cover underinsured. Although this does not affect the cover it will produce a large additional premium at the end of the term. There has also been an instance of a broker reducing material damage cover to indemnity only. This would only show up if there was a claim and the payment would not be on a replacement basis but on the basis of the value of the goods at the time of loss, less wear and tear. If an insured is offered a premium well below their existing premium examine this very careful as it may not be worth the paper it is written on.

We are happy to discuss your Commercial Insurance queries with you – call us on 01707 883377 or email us on

Image courtesy of Stuart Miles /

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