Defra to reform Flood Re in light of unfairness and capacity pressure

(by Karma Loveday)

Water minister Emma Hardy has announced that the Flood Re scheme will be reformed to correct “a system in which average-income and low-income households are subsidising flood insurance for the richest households in the country”.

Flood Re is subsidised by all households that buy insurance. The money is used to buy insurance for homes exposed to flooding, so premiums for those home owners remain affordable. Hardy said the scheme had been a success, but: 

• “The context in which Flood Re operates has changed; rising claims, higher reinsurance costs and more properties being identified as at risk are placing increased pressure on the scheme.”

• “In three of the last four years, Flood Re has spent more on repairing homes in the most expensive council tax bands of G and H, which make up less than 4% of UK homes, than it has spent on repairing homes in council tax bands A and B, which make up around 45% of homes.” She offered a colourful example of a £3m claim in 2025 for a property that had luxury facilities including a pool, gym and football pitch.

Planned reforms included: 

• Targeting support better through premiums that vary with council tax band and area. 

• Capping claims from insurers so Flood Re payouts are limited to an agreed level.

• Halving contents insurance premiums for homes in council tax bands A and B, to £25 a year from April 2027. 

• Introducing flood performance certificates, to help households to better understand their flood risk, and reducing premiums for those who take actions to make their homes more resilient.

• Instead of only restoring a home to a condition exactly as it was before, allowing an additional £10,000 as part of the insurance claim to improve the flood resilience.

  
  

The reforms will be implemented from 2028.