The Association of British Insurers (ABI) wants higher-value homes included in the UK Government’s Flood Re plan for affordable cover.

A memorandum of understanding last year proposed excluding properties in the band H taxation category, which comprises more valuable properties.

“The winter floods demonstrated that flooding can affect people regardless of their tax band and it is true that some people living in larger, band H homes could face issues affording cover,” a spokesman told insuranceNEWS.com.au.

The ABI has written to Environment Secretary Owen Paterson to make it clear the industry does not oppose letting Flood Re cover band H homes when it is up and running.

“Ministers were initially concerned it would be a challenging political issue to allow cross-subsidy from smaller to larger homes as part of the Flood Re levy,” ABI Policy Director Huw Evans said.

“Now it is clear the levy commands extensive cross-party support, [and] as the Water Bill reaches conclusion we want to make clear we think band H should be included in Flood Re when secondary legislation gets under way.”

Flood Re will subsidise insurance on high-risk homes to ensure cover is widely available and affordable.

It will be a mutual owned by insurers. They will pass the flood risk component of the premium to the fund, which will buy reinsurance.

Insurers will also handle claims, and policyholders will fund the scheme by paying a levy.