Last week’s launch of the UK Government-backed scheme to pool flood risk has been met with a downpour of derision by the broker community.
Teething problems impacting brokers’ abilities to sell Flood Re policies have caused a rift between insurers and brokers, with some intermediaries so disillusioned by the experience they don’t expect the programme to last.
Scott Hall, founder of Hall Commercial, a brokerage operating in the high flood-risk zone of the South West, told Insurance Business UK
that he had an email from Allianz
the day before Flood Re launched last week, saying that while insurance products would be available brokers wouldn’t be able to quote until July.
“It’s a shambolic way to introduce a new facility,” Hall said, “so some of us in the broker community look at Flood Re with a little bit of derision.”
The main issue at launch is that most insurers are offering Flood Re policies via their direct channels, seemingly at the expense of broker access to the same products; some insurers are looking at a three-month head start on the intermediaries.
It’s an issue BIBA has already picked up on, with Graeme Trudgill, executive director at BIBA, wading into an argument that is seeing software houses blaming insurers for delays and insurers pointing the finger at the software houses.
“We’ve been in dialogue with the main insurers and software houses over the last few months and have repeatedly raised issues and concern over competition where it appears direct arms have been prioritised over broking channels. It is clear some providers are lagging behind others… We want Flood Re for brokers and we need the market to get it resolved as soon as possible,” Trudgill said.
But Hall is not optimistic. “Insurers have had plenty of time to sort this out and have sorted out their own direct offering first,” he said. “It’s a complete and utter nightmare from the broker point of view and other brokers I spoke to have had a similar experience.”
David Motts, founder of Motts Godwin, a broker in London with a few properties on his books that are a flood risk according to some insurers, said he sees flood as a very difficult area to provide cover for. “When it comes to flood damage, you’re at the mercy of the weather. And at the end of the day I don’t think Flood Re will help people in affected areas. It’s unattractive because insurers know they will definitely have a claim.”
The early distributors of Flood Re policies, and those most likely to incur the wrath of the brokers, include Admiral
, Avantia, Aviva
, Cherish Insurance Brokers underwritten by Axa, Churchill, First Direct, Bank of Scotland, Legal & General, LV, Direct Line, More Than, Privilege, Halifax, Hiscox
, HSBC and Lloyds Banking Group.