Flood Re CEO Andy Bord issues update on joint initiative’s progress

Reporting on its financial and operational performance for the financial year 2022/2023, Flood Re issued forth a call for government, insurers and consumers to take urgent adaptive action to combat accelerating flood risk.

The joint initiative between the UK insurance industry and the UK government revealed that it backed 265,826 million policies during the year, up 3.6% from last year. It has been a busy period for the organisation, which will see Mark Hoban come to the end of his tenure as chair in September after eight and a half years of service, during which he successfully oversaw the creation, authorisation, and establishment of Flood Re.

In a media briefing discussing the annual report, CEO Andy Bord (pictured) paid tribute to Hogan and said he personally has “benefited hugely” from Hogan’s guidance and counsel since he joined Flood Re in 2017. He added that he is looking forward to working with the organisation’s new chair, who will be announced in due course.

Meanwhile, Bord noted that Flood Re’s Build Back Better (BBB) scheme has gained significant traction, with 63% of the market committing to offering the scheme as an option for the highest flood risk householders. And he affirmed his confidence that the insurers who have not yet signed up for the initiative will do so, noting that uptake continues to grow and is already in excess of two-thirds of the market.

“Inevitably, we focused on the big players first,” he said, “because that’s how you get the maximum traction and that’s where we’ve had success. It’s [now] about converting that long-tail of smaller insurers and so far, we have seen different levels of readiness rather than different levels of support. Personally, I want to achieve both. I want everyone to be signed up but equally, I want to know that there’s the confidence that’s offered with a robust product.”   

Among the key financials reported, Flood Re revealed that its before-tax profit of £110 million (down from 2022’s £132 million), reflects a “broadly benign year for flood events” and a planned reduction in income raised from the Levy on insurers of 25% to £135 million (down from £180 million in 2022). Flood Re’s GWP received increased from £46 million in 2022 to £52 million while the scheme increased its investment income to £14 million for the financial year, up from £0.3 million last year. 

Bord highlighted that Flood Re continues to deliver on its stated public purpose of increasing the availability and affordability of flood insurance. This is ably reflected in the metric that 99% of people living with flood risk are now able to obtain 15 or more competitive quotes, compared to before Flood Re launched when only 9% of this risk profile could obtain two or more quotes. Looking to the future, however, he said it’s clear that the need for Flood Re is ongoing.

While the government’s committed spending programme of £5.2 billion over five years is double the previous government’s investment, he said, what that spend is effectively doing is keeping flood risk flat. This risk needs to be actually reduced, in order to create confidence in the market’s ability to continue to offer affordable flood insurance when Flood Re exits in 2039. To achieve that, change needs to be driven at a household level as well, which is where the BBB scheme fits in.

Touching on how BBB is resonating with brokers, Bord noted that the engagement of the broker market with the initiative has been very positive, both in terms of their interest and their commitment to working to communicate its benefits to their customers. At BIBA’s 2023 conference, he said he saw first-hand the willingness of brokers to meet and engage on this topic.

“I think the thing about brokers is that they’re often accessing a niche, with often a significant overlap with flood, which is why it’s relevant to us,” he said. “So having the confidence that the insurer that your property is going to be placed with will actually build you back into a more resilient state, if you’re unlucky enough to be flooded, is a really important consideration when you’re buying your insurance through your broker.”

Last week’s launch of Flood Re’s transition plan was exceptionally well-timed given the alarming extreme weather events dominating headlines in recent weeks. These events underscore the importance of “not just urgent but decisive” adaptation measures, he said, and Flood Re has identified four major commitments which highlight the its ambition to lead from the front on this transition plan.

The first is its recommitment to the BBB scheme, he said, which has already been very successful but needs to be fully embedded across industry. His ambition is that the industry will challenge itself to normalise the scheme within the next year or so – becoming a standard part of a household policy. Flood Re’s second commitment is to develop a comprehensive scoring methodology for property-level flood resilience adaptations.

“The PFR (Property Flood Resilience) industry has actually seen quite a lot of innovation since Flood Re went live, but the growth has been pretty linear,” he said. “And we know to cope with the demand, we need to see exponential growth. And I believe Build Back Better will help that and our scoring methodology will take it a step further and should unlock further private and public funding streams.”

The third area of focus is the use of flood performance certifications, he said. This will see Flood Re bring to the market a scheme whereby people buying, selling or renting a home – at an individual property level – will be able to do so with greater confidence and understanding of the measures that have or could be installed within the home. Finally, and perhaps most significantly, Flood Re is looking to establish a centre of excellence to improve UK’s knowledge infrastructure around flooding and how to manage this risk.

“In summary,” he said, “we’ve seen another strong year of delivery, both on our core purpose, underpinned by robust financial results, and we’ve got real clarity on what needs to happen both across the market – [with our] call to action – and the commitments that we’re making ourselves at Flood Re in preparation for 3039 when we will exit the market.”