It looks like Capita got the better end of a deal with Flood Re, after the latter paid Capita £500,000 in 2016 to administer claims worth only a fifth of that amount.
The scheme – financed by a levy on house insurance policies – began last April 2016. Its first annual report shows a total of £97,000 in payouts.
The amount received by Capita for claims administration was said to be the minimum set out in the contract to ensure that the system was in place and available for payments handling, according to a report by the
Financial Times. It added that last year was not marked by large-scale flooding, compared to the previous winter.
Since the introduction of the scheme, about 80% of householders with previous flood claims had over 50% price reduction in their insurance, according to research conducted by Flood Re. “We’re encouraged by the number of policies that we have backed since launch and the significant increase in both affordability and availability of flood insurance,” said Flood Re chief executive Andy Bord as quoted by the report.
According to the report, Flood Re covered more than 127,000 home insurance policies and posted £28mn in premium income in the year ending March. Bord said the profitability will allow them to build up reserves for future flooding events.
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