Flood Re premium in home insurance renewal

BeetRoot

I have just received my home insurance renewal documents and have been told I must pay the Flood Re premium, even though my property is not in a flood risk area. It seems this stealth tax is being applied to all policies under a new government scheme, and is on top of the increased insurance premium tax. Rip off, or what?

paddyandstumpy

The levy for running Flood Re is circa 3% of each UK home insurer's income. Each insurer has to pay that, even if the homes they insure (like static holiday caravans) are outside of FR's acceptance criteria.
It's this cost that is being passed onto the consumer. If your property is actually being ceded to FR, you'll then pay an additional cost depending on cover and council tax band.
The fundamental principle of insurance is the cost of the claims of the few are spread amongst the many. Hence the price increases after the 2007 floods.
You'll be grateful for this 'spread' approach if you ever have a £250,000 claim.