Global broking group Marsh said its affordable flood insurance plan has “critical mass”, despite pessimism from one commentator today.
Marsh and its sister company Guy Carpenter announced ‘Project Noah’ which they claim can secure affordable flood insurance for at risk properties in the UK, only to have the idea chastised following a tweet from an Insurance Edge reader.
— MarketforceIns (@MarketforceIns) April 3, 2012
My understanding no Major Insurers are supporting this “@MarketforceIns: Is “Project Noah” the solution? businessmediaroundup.com/2012/04/03/mar… @RalphSavage” — David Williams (@AXADavidW) April 3, 2012
As the conversation threatened to travel in circles across the twittersphere, @marsh_inc was approached for comment, the company opting for a more traditional response:
Hutton Swinglehurst, Head of Flood Risk for MarshUK, said: “We have been testing and developing the Project Noah model with some of the country’s largest insurers and have the necessary critical mass to launch.”
Escalating payouts for flood damage and the impending end of the Statement of Principles on the Provision of Flood Insurance have left UK homeowners in flood-prone regions uncertain about their future ability to obtain insurance for their homes.
In response, Marsh and Guy Carpenter, together with digital mapping and land data intelligence provider Landmark Information Group, have created Project Noah. To be launched in mid-2012, this new flood risk reinsurance pool will ensure that home insurance in flood-prone areas is widely available and fairly priced.
Using its newly-developed flood risk pricing model, its developers say Project Noah will enable insurers to transfer their residential flood risks, less a small retention, into the international reinsurance market. The model claims to be able to identify and calculate the flood risk of every residential property in the UK, enabling investment in flood defences to be targeted more effectively.
By reducing the flood risk element in household insurance policies, insurers will be able offer competitive cover, even to properties with a high flood risk, Marsh & Guy Carpenter said in a statement today: “The provision of cost-effective home insurance for homes in areas exposed to flooding is a major challenge for the UK’s insurance industry,” commented Hutton Swinglehurst, Head of Flood Risk for Marsh UK. “We have tested Project Noah with some of the UK’s largest insurers, as well as leading global reinsurers, who believe that this state-of-the-art model provides an innovative solution to an intractable problem. For many years, insurers have been wanting to compete for the business of consumers who would otherwise be attractive were it not for the flood risk to their homes. Project Noah will allow them to do so.”
Donald Macdonald, Head of UK Property at Guy Carpenter, added: “Project Noah creates a virtuous circle: the more units in the pool, the more predictable the risk and the lower the price to policyholders. This has far-reaching benefits, from ensuring that flood insurance remains widely available to higher risk properties without the need for government intervention, to protecting property values for homeowners in at-risk areas.”