In an industry first, North London-based broker 1st Sure Flats launches new flood insurance solution for blocks not covered by government-backed Flood Re scheme at the ARMA conference.
With the incidence of flooding in the UK increasing year-on-year, anyone living in a high risk area relies on their home insurance policy to protect their most valuable asset should their home be damaged by flood water.
The Flood Re Scheme, which went live in April 2016, is designed both to protect the insurance industry against an unaffordable level of claims and to ensure flood cover is available and affordable for homeowners. Unfortunately the government-backed scheme leaves a gaping hole in the home insurance market: it doesn’t apply to residential blocks in England and Wales with four flats or more. These blocks are treated by Flood Re as commercial enterprises because many freeholders derive income from their leasehold portfolios. And the result? An increasing number of flat owners left uninsured and completely unprotected.
To tackle this problem, London-based broker 1st Sure Flats (a subsidiary of Midway Insurance) in conjunction with solicitors PM Legal Services has come up with a ground-breaking solution.
Says 1st Sure Flats’ MD Paul Robertson: “By re-writing a lease we can emulate the principles of Strata tenure (which is allowable under the scheme) bringing the insurance obligation to the leaseholder rather than the freeholder. This means the flood element of any policy now falls within the remit of Flood Re”.
PM Legal Services has designed a simple format that allows leases to be quickly and easily modified at low cost to flat owners. Once this process is complete, blocks are issued with a master policy and each flat owner is provided with a separate policy, ensuring all leaseholders have the peace of mind of affordable, comprehensive flood cover.
“We have effectively streamlined the lease modification process – and have navigated the complex FCA regulations as they apply to consumers – in order to bring a new and much-needed product to the market,” says Paul.