First the good news: it was reported a couple of days ago that Flood Re has been approved by the European Commission, which has ruled that it does not violate rules on state aid. And then the bombshell….
I woke up yesterday morning to hear a report on the BBC’s The Today Programme saying that the Committee on Climate Change (CCC), an independent government advisory body, has decided that Flood Re is ‘wasting householders’ money’ and that the cost of the scheme is three times greater than its benefits.
The CCC argues that the scheme is too generous, that the additional premium which will be added to everyone’s flood insurance policy should be lowered, and that money should be used to prevent flooding rather than helping people clear up once a flood has occurred.
The chair of the CCC sub-committee which has looked at Flood Re has been quoted on the BBC website as saying: “Managing flood risk will always be the best way of securing affordable insurance in the long term. A transition should be achieved by helping high-risk homes become more resilient. There is a risk that Flood Re will be counter-productive to the long-term management of flood risk in the UK, as it largely removes the financial incentive for households to take steps to avoid being flooded. As a consequence, the industry levy funding the scheme could spiral.”
We have said all along that there was a chance that the proposed start date for the Flood Re scheme for affordable flood insurance – July of this year – may not happen. This latest news does nothing to lessen our fear.