Policies ceded to Flood Re hit record high in 2024/25

Flood Re, the UK government-backed scheme funded by the insurance industry to improve access to affordable flood insurance, has reported a record 20% increase in policies ceded, reaching 346,200 for the year ending 31 March 2025.

Now in its tenth year, Flood Re has helped over 660,000 households secure flood insurance coverage to date, with the recent surge in uptake reportedly reflecting an increasingly dynamic and challenging risk environment.

Amid rising global reinsurance costs and a growing frequency of severe weather events, the scheme has experienced a notable increase in high-value claims, including several exceeding £100,000 and even £1 million.

In response to these pressures, Flood Re increased its reinsurance liability limit to £3.2 billion for the year ending 31 March 2025.

Its net retention also rose to £347 million under the 2025–2028 programme, up from £130 million under the 2022–2025 framework.

Despite the heightened claims activity, which totalled £159.6 million for the year—above average but down from 2023/24—the scheme maintained a strong financial position. Flood Re also reported a profit before tax of £13.5 million for the year ending 31 March 2025.

“This backdrop has strengthened the case for further reforms to ensure that the Scheme remains sustainable in the long term,” Flood Re said.

It continued, “Changes that may be required include premium adjustments, reforms to the Scheme funding model and the scope of properties covered. Flood Re is committed to finding the right balance between these necessary reforms, working hand in hand with the government and the insurance industry.”

To safeguard its financial resilience, Flood Re has implemented several key strategic measures.

In March, the Scheme launched its inaugural catastrophe bond, “Vision 2039,” marking its entry into the insurance-linked securities (ILS) market and enhancing the diversification of its reinsurance programme.

Read more about this London Bridge 2 PCC Limited (Vision 2039 – 2025-1) catastrophe bond, and all others, in the Deal Directory of our sister publication, Artemis.

At the same time, Flood Re has secured a new three-year funding agreement with the UK government, increasing Levy I from £135 million to £160 million. Amid mounting cost pressures, Flood Re also announced the first mid-year premium adjustment in its history, set to take effect from 1 October 2025.

Additionally, the Scheme’s statutory loss limit was raised from £100 million to £250 million, significantly strengthening its capacity to absorb large-scale losses.

Perry Thomas, CEO of Flood Re, commented, “The world Flood Re was designed for – one of predictable weather patterns, modest claims and accessible reinsurance – is rapidly disappearing.

“Climate change has reshaped the risk environment, driving up costs and amplifying our exposure. In response, we must urgently consider how the Scheme itself needs to evolve.

“This includes revisiting how it is funded, how premiums are structured and which properties it should cover. These are complex but essential discussions if we are to preserve the availability and affordability of flood insurance for the long term.

“Bold action now will be critical to ensuring the Scheme’s sustainability through to its planned conclusion in 2039.”

Bridget Rosewell CBE, Chair of Flood Re, said, “We are proud of the role that Flood Re has played in protecting UK households – and of the innovation and resilience shown this year. But looking ahead, there are tough choices.

“Climate risk is growing, reinsurance conditions are tighter, and affordability is under threat. If we want to preserve the benefits that Flood Re has delivered, we must be bold, collaborative and forward-thinking. The decisions that we make now will shape flood insurance for decades to come.”

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