Flood Re Scheme UK: How It Works and Who Qualifies

What Flood Re is

Flood Re is a reinsurance scheme created to make flood cover available and affordable for households at high risk of flooding. It is a not-for-profit body backed by both the government and the insurance industry, and it sits behind the home insurance market rather than selling to the public. Its purpose is to absorb the flood risk that would otherwise make some homes very expensive or difficult to insure.

The scheme was set up under the Water Act 2014 and began operating in 2016. It replaced an earlier informal agreement between the government and insurers, putting the arrangement on a statutory footing with a clear funding mechanism and defined eligibility rules. This gave both insurers and homeowners more certainty than the previous arrangement had offered.

At its heart, Flood Re is about pooling. Rather than each insurer carrying the full cost of the riskiest homes alone, the scheme spreads that cost across the whole market. This is what allows insurers to quote affordable flood cover on properties that, priced purely on individual risk, might otherwise face very high premiums.

How the scheme is funded and operated

Flood Re is funded in two main ways. The first is a levy charged on UK home insurers, which raises a pooled fund to pay flood claims passed into the scheme. The second is the reinsurance premium an insurer pays when it cedes a policy's flood risk to Flood Re, which is capped at set rates linked to the property's council tax band.

The operational flow is straightforward from the insurer's side. When an insurer writes an eligible home policy, it can choose to pass the flood portion of that policy into Flood Re for the capped premium. If the home then suffers a flood, the insurer handles the claim with the homeowner as normal, and Flood Re reimburses the insurer for the flood element. The homeowner deals only with their own insurer throughout.

Because the premium an insurer pays into the scheme is capped, insurers can price the flood part of a policy at a level the household can afford, regardless of how high the individual flood risk might be. The levy and the cap together are the financial engineering that delivers affordability across the pool.

Eligibility rules in detail

Eligibility is defined by the property, not the person. A home generally qualifies if it is a UK residential property, falls within council tax bands A to H (or the equivalent valuation bands in Scotland, Wales and Northern Ireland), and was built before 1 January 2009. The build-date condition is intended to avoid subsidising insurance for new homes constructed in known flood-risk areas.

A number of property types fall outside the scheme:

• Homes built on or after 1 January 2009, which are excluded by the build-date rule.
• Commercial property and business premises, since the scheme is for household risk.
• Larger blocks of flats above defined unit thresholds, and certain freehold and mixed-use buildings.
• Properties that do not meet the residential household criteria the scheme was designed to support.

The treatment of leasehold flats and freehold buildings containing multiple units can be detailed, so a homeowner who is unsure should ask their insurer to confirm whether the property can be ceded to Flood Re.

What the scheme means for homeowners

For a homeowner, the most important point is that Flood Re works invisibly. There is no Flood Re policy to buy and no application to submit. A household buys an ordinary buildings and contents policy from an FCA-authorised insurer, and the scheme operates in the background to make competitive flood cover possible on eligible homes.

That said, the homeowner's conduct still matters. Under the Consumer Insurance (Disclosure and Representations) Act 2012, a consumer must take reasonable care to answer the insurer's questions accurately, including any history of flooding. Honest disclosure protects the validity of a future claim, because a misrepresentation can allow an insurer to reduce or refuse a payment.

Homeowners can also benefit from flood resilience. The scheme supports a build back better approach, where flood resilience measures can be funded as part of repairing a flood-damaged home, helping reduce the damage and cost of any future flood. Measures such as flood doors, raised sockets and non-return valves can make a real difference to how a property fares.

The 2039 transition and what comes next

Flood Re is explicitly a transitional scheme rather than a permanent feature of the market. It is designed to operate until 2039, by which time the intention is for home insurance to move towards risk-reflective pricing supported by stronger flood defences and wider take-up of property-level resilience.

This transition plan shapes how homeowners and communities should think about the long term. The affordability Flood Re provides today buys time for flood defences to be built and for resilience to spread, but it is not a guarantee that flood cover will be cheap indefinitely. Investing in resilience and supporting local flood defence work has lasting value.

For the period the scheme is in place, the practical position is reassuring: eligible homes can generally obtain affordable flood cover through the normal insurance market, with Flood Re doing the heavy lifting behind the scenes. Understanding how the scheme works helps homeowners buy with confidence and disclose accurately.

Frequently asked questions

What is Flood Re in simple terms?

Flood Re is a reinsurance pool funded by a levy on home insurers. Insurers pass the flood risk of eligible homes into it for a capped premium, which keeps flood cover affordable for households at high flood risk.

Which homes qualify for Flood Re?

Generally UK residential homes in council tax bands A to H, or equivalent valuation bands, that were built before 1 January 2009. Newer homes, most commercial property and some flats are excluded.

Do I pay Flood Re directly?

No. You buy a standard home insurance policy from an insurer. The insurer pays the reinsurance premium into Flood Re, and you never contact the scheme yourself.

When was Flood Re set up?

It was established under the Water Act 2014 and launched in 2016 as a joint government and insurance industry scheme to address the availability and affordability of household flood cover.

Will Flood Re always exist?

No. It is a transitional scheme designed to run until 2039, after which the market is intended to move to risk-reflective pricing supported by improved flood defences and resilience measures.