Conveyancing specialists have welcomed news that 29 insurers have signed up to a new flood protection scheme.
Flood Re, a national scheme to support households at the highest risk of flooding, went live last month following authorisation by the Prudential Regulation Authority and Financial Conduct Authority.
Responding to a parliamentary question by Worcester MP Robin Walker, Department for Environment, Food and Rural Affairs minister Rory Stewart said 29 insurers are using Flood Re.
Stewart also confirmed that a review of the scheme will take place in 2019.
The Conveyancing Association said it was 'not surprised' that the review will not take place for another three years, 'as there will still need to be time to see the full cycle of insurance renewals and property sales to be able to say whether the system works effectively, plus (heaven forbid) some processed flood claims'.
However, Beth Rudolf, director of delivery, said the association would welcome an 'earlier' review of the limitations on leasehold properties, 'as the additional costs involved where Flood Re is not available will surely impact on those least able to afford them, name first-time buyers and the elderly'.
A guide published by the department states that Flood Re will be a not-for-profit reinsurance body ‘run and managed by the insurance industry’.
Insurers will maintain a ‘direct relationship’ with their customers, with policyholders paying premiums and making claims directly to the insurer.
‘However, if an insurer calculates that the flood-risk element of a policy will cost more than the premium set under Flood Re, that insurer can cede the flood-risk part of the policy to Flood Re,’ the guidance states. ‘In the event of a flood, the insurer would pay the claim to its customer and seek reimbursement from Flood Re.’
Following Flood Re going live, search provider SearchFlow warned that detailed criteria as to whether a property is eligible to benefit from the scheme meant it was ‘less clear throughout the conveyancing process as to how to proceed’.