Majority of UK insurers underprepared for Flood Re
Almost three quarters of insurance market participants believe they are underprepared in key areas relating to the UK's Flood Re initiative, according to a survey conducted by EY.
The professional services company surveyed household insurers, distribution partners and brokers to assess the progress such firms had made with their preparations ahead of the launch date of April 2016.
The survey found that while 71 percent of respondents had made progress in preparing for the state-backed scheme, they still had not addressed key areas such as detailed technical requirements on data sharing.
Participants felt that Flood Re and the Association of British Insurers should be clearer about the detail of how data sharing and the levy calculation will work.
Flood Re involves an industry-wide levy that could give the pool a competitive advantage, although in January the European Commission found that the scheme was compatible with EU rules and did not constitute state aid.
A further 40 percent of respondents to the EY survey said that they remained in the early stages of planning for Flood Re. Some appear to be waiting for the more detailed rules and processes to be published before starting to plan for the changes to their business models.
The survey covered approximately one third of the household market by premium volume.
Executive director at EY and report author Tony Sault said that while a considerable amount had been achieved by Flood Re and the industry to date, the findings showed that much remained to be done ahead of the scheme's launch next year.
"Those firms that remain in the early stages of preparations will certainly have a busy eight months ahead, and in some cases the costs of preparing for Flood Re may deter insurers from participating at all," he added.
Earlier this month, Flood Re announced that it had started its on-boarding process for insurers. The process ensures industry participants have the information and access required to test the programme.