Flood Re has spent more repairing homes in Council Tax Bands G and H - fewer than 4% of UK homes - than in Bands A and B - around 45% of UK homes - in three of the last four years. That imbalance is the structural problem driving a package of reforms announced on July 1 alongside the Department for Environment, Food and Rural Affairs, as the scheme enters its final thirteen years before its planned 2039 wind-down.
The most immediate change cuts the premium Flood Re charges insurers for contents-only policies in Bands A and B from £52 to £25 from April 2027, targeting lower-income households and renters, with insurers expected to pass the savings on to customers. At the other end of the spectrum, premiums for Band H properties ceded to Flood Re in the year starting April 2026 rose to £1,613, up from £1,200 when the scheme launched in 2016, while Band G premiums have risen roughly 45% in just over a year. The direction of travel is deliberate: redirect support toward the households the scheme was originally designed to protect, and price higher-value properties more accurately against their actual cost to the fund.
The pricing changes sit alongside a broader restructuring of how Flood Re funds and transfers its risk. A new three-year funding arrangement with the government has raised the annual levy on insurers offering home insurance in the UK from £135 million to £160 million, and Flood Re has increased its statutory loss limit from £100 million to £250 million.
The scheme has also been diversifying beyond conventional reinsurance. In March 2025, Flood Re completed Vision 2039, its first catastrophe bond, securing £140 million in fully collateralised UK flood reinsurance through Lloyd's London Bridge 2 insurance-linked securities structure - the first UK flood risk indemnity cat bond to reach market and the first use of London Bridge 2 by a non-Lloyd's entity. For the London Market, the placement signals that UK flood risk is drawing capital markets investors alongside traditional reinsurers, as the scheme works to reduce its reinsurance dependency before 2039.
Policies ceded to the scheme rose 20% to 346,200 in 2024/25, with more than 742,000 households having benefited since launch. The backdrop gives those figures their urgency: the Environment Agency estimates around 4.6 million properties in England are at risk of surface water flooding, including roughly 1.1 million at high risk, and 2026 has already brought a wetter-than-average start to the year, with Cornwall recording its wettest January on record.
Alongside the pricing and funding changes, Flood Re will pilot new Flood Performance Certificates, assessing a property's flood resilience in a similar way to Energy Performance Certificates, with premium discounts for households that obtain one. The scheme will also expand its Build Back Better programme, which provides up to £10,000 of resilience measures as part of flood repairs - more than 70% of the residential insurance market now offers Build Back Better. The government has separately committed £6.85 billion to flood defences through 2029, a figure Flood Re-commissioned research has previously found delivers an estimated £1.15 billion in annual damage savings to UK households.
The Flood Performance Certificate pilot is worth watching as a potential future underwriting signal - if it becomes standard, it gives insurers a new data point for pricing resilience investment at property level rather than relying solely on council tax band as a proxy.
