Flood Risk (Prevention and Insurance) Bill

A

BILL

TO

Empower prevention capabilities in flood management and introduce flood risk insurance mechanisms, and for connected purposes.

BE IT ENACTED by the King’s Most Excellent Majesty, by and with the advice and consent of the Lords Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows —

Chapter 1: General Provisions

Section 1: Definitions

For the purpose of this Act, the following definitions apply unless specified otherwise elsewhere —

(1) “flood insurance” means insurance in respect of risks arising from a flood.

(2) “the FR Scheme” refers to the Flood Reinsurance Scheme

(3) “the FR Scheme's accounts” means the accounts for a financial year of the FR Scheme prepared by the FR Scheme administrator in respect of the FR Scheme.

Chapter 2: Flood Prevention and Mitigation

Section 2: Minimum requirements for flood mitigation and protection

(1) The Secretary of State or the relevant Department must, before the end of the period of six months beginning on the day this Act is passed, building regulations for the purpose in subsection (2).

(2) That purpose is to set minimum standards for new build public and private properties in England for—

(a) property flood resilience,
(b) flood mitigation, and
(c) waste management in connection with flooding.

(3) Minimum standards established for new build properties shall be subject to annual review, conducted by the relevant authority, whereby the Secretary of State must lay down a copy before Parliament of the review.

(4) In response to the review, the Secretary of State must update the minimum standards to meet the recommendations and address issues highlighted within the review.

Section 3: Duty to make flooding data available

(1) The Secretary of State and local authorities in England must take all reasonable steps to make data about flood prevention and risk publicly available.

(2) The duty under subsection (1) extends to seeking to facilitate use of the data by —

(a) insurers for the purpose of accurately assessing risk, and
(b) individual property owners for the purpose of assessing the need for property flood resilience measures.

Section 4: Flood prevention and mitigation certification and accreditation schemes

(1) The Secretary of State must by regulations establish —

(a) a certification scheme for improvements to domestic and commercial properties in England made in full or in part for flood prevention or flood mitigation purposes, and
(b) an accreditation scheme for installers of such improvements.

(2) The scheme under subsection (1)(a) must—

(a) set minimum standards for the improvements, including that they are made by a person accredited under subsection (1)(b), and
(b) provide for the issuance of certificates stating that improvements to properties have met those standards.

(3) The scheme under subsection (1)(a) may make provision for the certification of improvements that were made before the establishment of the scheme provided those improvements meet the minimum standards in subsection (2)(a).

(4) Regulations under this section—

(a) are to be made by statutory instrument;
(b) may make consequential, supplementary, incidental, transitional or saving provision;
(c) may make different provision for different purposes;
(d) may not be made unless a draft of the instrument has been laid before and approved by affirmative procedure.

Chapter 3: Flood Reinsurance

Section 5: The Flood Reinsurance Scheme

(1) For the purposes of this Chapter, the Flood Reinsurance Scheme is a scheme which—

(a) is established for the purpose mentioned in subsection (2), and
(b) is designated for the purposes of this Chapter by regulations made by the Secretary of State.

(2) The purpose referred to in subsection (1)(a) is the purpose of providing reinsurance to relevant insurers in respect of such risks arising from a flood as are identified by the scheme, in such a way as to—

(a) promote the availability and affordability of flood insurance for household premises and small and medium-sized enterprise premises while minimising the costs of doing so, and
(b) manage, over the period of operation of the scheme, the transition to risk-reflective pricing of flood insurance for household premises and small and medium-sized enterprise premises.

(3) The Secretary of State may by regulations make provision as to levels of reinsurance premiums payable by relevant insurers under the FR Scheme, and may make different provision for different purposes.

(4) Regulations under subsection (3) may, in particular, make different provisions for different purposes by reference to the value of the household premises insured.

Section 6: Scheme administrator

(1) The FR Scheme is to be administered by a body designated by regulations made by the Secretary of State.

(2) The Secretary of State may under subsection (1) designate a Departmental agency, or any other competent authority.

(3) In this Chapter, the body designated under subsection (1) is called “the FR Scheme administrator”.

Section 7: Scheme administration

(1) The Secretary of State may by regulations make provision in connection with the administration of the FR Scheme.

(2) Regulations under subsection (1) may require the FR Scheme administrator to have regard to the following in discharging its functions—

(a) the need to ensure economy, efficiency and effectiveness in the discharge of those functions,
(b) the need to act in the public interest,
(c) the need to ensure propriety and regularity in the operation of the FR Scheme, and
(d) the need to manage, over the period of operation of the FR Scheme, the transition to risk-reflective pricing of flood insurance for household premises and small and medium-sized enterprise premises.

(3) Regulations under subsection (1) may require the FR Scheme administrator to produce and publish, in accordance with the regulations, a plan for achieving the transition mentioned in subsection (2)(d).

(4) Regulations under subsection (1) may require the FR Scheme administrator to provide the following information to relevant insurers who have issued insurance policies that are reinsured under the FR Scheme, so that those insurers may supply the information to holders of those policies—

(a) information about how to find out about the levels of flood risk to which an area in which household premises and small and medium-sized enterprise premises are situated is subject and how any flood risk may be managed;
(b) information about the FR Scheme, including information about the effect of section 64(2)(b) (transition to risk-reflective pricing of flood insurance for household premises and small and medium-sized enterprise premises ).

(5) Regulations under subsection (1) may—

(a) limit, to any extent, the power of the FR Scheme administrator to borrow money or otherwise incur debt;
(b) make provision about the reserves of the FR Scheme, including limitations on draw downs and transfers;
(c) require the FR Scheme administrator to take steps to limit the overall net losses that may be incurred by the FR Scheme in any year to an amount specified in or determined in accordance with the regulations;
(d) provide for the form and contents of the FR Scheme's accounts;
(e) provide for a copy of the audited FR Scheme's accounts and a copy of the auditor's report on those accounts to be laid before Parliament;
(f) provide for the Comptroller and Auditor General to examine—
(i) the economy, efficiency and effectiveness with which the FR Scheme administrator has used resources in discharging its functions, and
(ii) the propriety and regularity in the operation of the FR Scheme,and for a report on any such examination to be laid before Parliament;
(g) provide that for the purposes of an examination under paragraph (f)—
(i) the Comptroller and Auditor General is to have a right of access at all reasonable times to any of the documents relating to the FR Scheme, and
(ii) a person who holds or has control of any of those documents is to give the Comptroller and Auditor General any assistance, information or explanation which the Comptroller and Auditor General requires in relation to any of those documents.

(6) Regulations under subsection (1) may—

(a) require the FR Scheme administrator to designate an individual of a description specified in the regulations as the responsible officer of the FR Scheme;
(b) provide for the responsible officer to have such responsibilities in respect of—
(i) the FR Scheme's finances,
(ii) the FR Scheme's accounts,
(iii) accountability to Parliament for the economy, efficiency and effectiveness with which the FR Scheme uses resources in discharging its functions,
(iv) accountability to Parliament for propriety and regularity in the operation of the FR Scheme, and
(v) examinations and reports under subsection (5)(f),as are specified in the regulations.

(7) Regulations under subsection (1) may make provision about the disclosure of information required for the purposes of the FR Scheme and may, in particular, require relevant insurers to supply to the FR Scheme administrator such information as it may request in relation to insurance policies issued by them.

(8) Regulations under subsection (1) may provide for the supply by the FR Scheme administrator of information held by it in connection with the FR Scheme to—

(a) the Environment Agency,
(b) the Scottish Environment Protection Agency,
(c) the Natural Resources Body for Wales,
(d) the Department of Agriculture and Rural Development in Northern Ireland, or
(e) such other body as may be specified in the regulations.

(9) Regulations under subsection (1) may provide for the supply by the FR Scheme administrator of information held by it in connection with the FR Scheme to the Secretary of State for purposes relating to government accounting.

(10) Subsections (2) to (9) are not exhaustive of what may be done under subsection (1).

Section 8: Disclosure of HMRC council tax information

(1) The Commissioners for Her Majesty's Revenue and Customs may disclose relevant HMRC council tax information to any person who requires that information for either of the following descriptions of purposes—

(a) purposes connected with such scheme as may be established and designated in accordance with Section 5 (in any case arising before any scheme is so designated);
(b) purposes connected with the FR Scheme (in any case arising after the designation of a scheme in accordance with section 5).

(2) A person to whom information is disclosed under subsection (1)(a) or (b)—

(a) may use the information only for the purposes mentioned in subsection (1)(a) or (b), as the case may be;
(b) may not further disclose the information except with the consent of the Commissioners.

(3) In this section—

(a) “HMRC council tax information” means information which is held for council tax purposes by the Valuation Office of Her Majesty's Revenue and Customs;
(b) “relevant HMRC council tax information” means HMRC council tax information relating to premises which are household premises and consisting of any of the following—
(i) the address (including the postcode) of the premises;
(ii) the council tax valuation band in which the premises fall;
(iii) information about when the premises were constructed;
(iv) the National Address Gazetteer unique property reference number for the premises;
(v) the unique address reference number allocated to the premises by the Valuation Office of Her Majesty's Revenue and Customs.

(4) The Secretary of State may by regulations amend the definition of “relevant HMRC council tax information” in subsection (3).

(5) If the Secretary of State by regulations under subsection (4) amends the definition of “relevant HMRC council tax information” to add further descriptions of information, those regulations may include the provision described in subsection (6).

(6) The regulations may provide that if a person discloses, in contravention of subsection (2)(b), information which is relevant HMRC council tax information by virtue of the regulations and which relates to a person whose identity—

(a) is specified in the disclosure, or
(b) can be deduced from it,section 19 of the Commissioners for Revenue and Customs Act 2005 (wrongful disclosure) applies in relation to that disclosure as it applies in relation to a disclosure, in contravention of section 20(9) of that Act, of revenue and customs information relating to a person whose identity is specified in the disclosure or can be deduced from it.

(7) The Secretary of State must consult the Commissioners for Her Majesty's Revenue and Customs before making regulations under subsection (4).

Section 9: Disclosure of business rates information

(1) The Secretary of State may by regulations require public bodies to disclose information relating to business rates to any person who requires that information for either of the following descriptions of purposes—

(a) purposes connected with such scheme as may be established and designated in accordance with Section 5 (in any case arising before any scheme is so designated);
(b) purposes connected with the FR Scheme (in any case arising after the designation of a scheme in accordance with Section 5).

(2) A person to whom information is disclosed under regulations made under subsection (1)(a) or (b)—

(a) may use the information only for the purposes mentioned in subsection (1)(a) or (b), as the case may be;
(b) may not further disclose the information except in accordance with those regulations.

Section 10: Insurance premiums

(1) The Financial Conduct Authority must, before the end of the period of six months beginning on the day this Act is passed, make rules under the Financial Services and Markets Act 2000 requiring insurance companies to take into account the matters in subsection (2) when calculating insurance premiums relating to residential and commercial properties.

(2) Those matters are—

(a) that certified improvements have been made to a property under section 3, or
(b) that measures that were in full or in part for the purposes of flood prevention or mitigation have been taken in relation to the property that were requirements of the local planning authority for planning permission purposes.

Section 11: Flood Reinsurance scheme eligibility

(1) The Secretary of State must, before the end of the period of six months beginning on the day this Act is passed—

(a) establish a Flood Reinsurance scheme in accordance with subsection (2), and
(b) lay before Parliament a draft statutory instrument containing regulations under that section to designate that scheme.

(2) A Flood Reinsurance scheme is in accordance with this section if it extends eligibility to—

(a) premises built on or after 1 January 2009 which have property flood 10 resilience measures that meet the standard under Section 3(2)(a), and
(b) buildings insurance for small and medium-sized enterprise premises.

(3) The Secretary of State may by regulations require public bodies to share business rates information with the scheme established under subsection (1)(a) for purposes connected with the scheme.

Chapter 4: Flood Insurance Obligations

Section 12: Flood insurance obligations

(1) This Act shall require a relevant insurer to issue, in a prescribed period at the discretion of the Secretary of State, insurance policies that provide cover against a prescribed description of risk for a prescribed number of registered premises.

(2) Regulations may prescribe different numbers of registered premises for different descriptions of risk.

(3) The descriptions of risks that may be prescribed are those arising from a flood.

(4) The regulations may provide for a prescribed number relating to a relevant insurer to be determined by reference to factors that include in particular—

(a) a target number;
(b) the relevant insurer's share of insurance business of a prescribed description.

(5) The regulations may—

(a) make provision about determining the size of a relevant insurer's share of insurance business of a prescribed description;
(b) provide for a relevant insurer to be exempt from the obligation described in subsection (1) in prescribed circumstances, whether wholly or so far as regards a particular description of risk, including circumstances relating to the amount of insurance business done by the relevant insurer;
(c) make provision about the circumstances in which a relevant insurer ceases to be subject to the obligation described in subsection (1), whether wholly or so far as regards a particular description of risk;
(d) make provision about the cases in which issuing an insurance policy is not to count towards discharging an obligation imposed on a relevant insurer by the regulations, including cases in which an insurance policy is not to count because of the content of its terms;
(e) make provision for allowing an insurance policy issued by another insurer to count towards the discharge of an obligation to issue a number of insurance policies imposed on a relevant insurer by the regulations;
(f) make provision about determining the number of registered premises for which a relevant insurer has issued insurance policies, including provision for varying, by reference to the risk band applicable to the particular registered premises, the extent to which insuring those premises counts in determining that number.

(6) Provision under subsection (5)(a) may require an insurer, in determining the insurer's share of insurance business of a prescribed description, to use information about that insurance business held by—

(a) the Secretary of State,
(b) a person acting on behalf of the Secretary of State, or
(c) the FCA.

(7) Subsection (5)(e) is not to be taken as requiring a change in the person who is the insurer in relation to an insurance policy.

(8) Regulations under this section may include provision in respect of cases where an insurer has not provided such information as is required by regulations under Section 14 including—

(a) provision for determining whether the insurer is a relevant insurer,
(b) provision for determining whether an exemption applies, and
(c) provision for determining what share of insurance business of a prescribed description the insurer is to be treated as having.

(9) Before making regulations under this section, the Secretary of State must consult such persons as the Secretary of State considers appropriate.

(10) In this section “prescribed” means specified in or determined in accordance with regulations under this section

Section 13: Target number

(1) The Secretary of State shall, upon biannual review, by regulations prescribe a number to be a target number for the purposes of regulations under Section 12.

(2) A target number is the number of registered premises to be covered against a prescribed description of risk by insurance policies issued in a prescribed period by those relevant insurers upon whom obligations are imposed by regulations under Section 12.

(3) The regulations shall prescribe different target numbers for different descriptions of risk.

(4) The regulations may in particular provide for a target number to be expressed as a percentage of the number of registered premises.

(5) The regulations may, at any one time, prescribe target numbers for two or more consecutive prescribed periods.

(6) In this section “prescribed” means specified in or determined in accordance with regulations under this section.

Section 14: Information

(1) The Secretary of State may by regulations make provision about—

(a) the provision of information, and
(b) the production of documents by insurers for the purposes of regulations under Section 12.

(2) This Act shall require an insurer to provide information of a prescribed description and/or produce documents of a prescribed description for the purpose of showing, in relation to a prescribed period—

(a) whether or not an insurer is a relevant insurer;
(b) whether or not an exemption applies (see section 12(5)(b)).

(3) This Act shall in particular require an insurer to provide information or produce documents about—

(a) the insurance policies issued by it in a prescribed period that provide cover against prescribed descriptions of risk;
(b) the value of the insurance policies so issued;
(c) insurance policies so issued that do not remain in force to the end of the period of cover;
(d) the value of such insurance policies.

(4) The Information and/or documents produced shall be provided to the Secretary of State or a person acting on behalf of the Secretary of State.

(5) The Secretary of State may make regulations to make provision—

(a) about the time within which information must be provided or documents produced;
(b) about the form in which information is to be provided;
(c) about the place where documents are to be produced;
(d) requiring information to be verified in a prescribed manner;
(e) requiring documents to be authenticated in a prescribed manner.

(6) The regulations may make provision about—

(a) the persons to whom, and the purposes for which, information supplied by an insurer may be disclosed;
(b) the publication of information by the Secretary of State about the amount of insurance business of a prescribed description done by insurers, taken together.

(7) In this section “prescribed” means specified in or determined in accordance with regulations under this section.

Section 15: Register of premises subject to greater flood risk

(1) This Act shall hereby create a register of household premises in the United Kingdom that are subject to greater flood risk for the purposes of regulations under Section 12, in which —

(a) the Secretary of State shall set regulations to the maintaining of the established register.

(2) The register shall provide for the levels of flood risk to which premises are subject to be divided into at least two or more bands (“risk bands”), and may prescribe the upper and lower limits of each band.

(3) The register must specify the level of flood risk to which particular household premises are subject by specifying the risk band applicable to the premises.

(4) Regulations may provide for premises of a description specified in the regulations to be excluded from the register, and the premises excluded may include in particular premises where construction is completed on or after a date specified in the regulations.

(5) The regulations must —

(a) specify the information to be contained in the register;
(b) make provision about access to the information contained in the register;
(c) provide for the publication of the register in whole or in part;
(d) provide for the disclosure of information contained in the register;
(e) provide for notification if premises are entered in, or omitted from, the register.

(6) Regulations made under subsection (5)(d) may provide for—

(a) the persons to whom information or any description of information contained in the register may be disclosed;
(b) the imposition of conditions on persons to whom information contained in the register is disclosed, including conditions limiting further disclosure;
(c) penalties for non-compliance with conditions imposed under paragraph (b).

(7) The regulations may require applications for premises to be entered in the register to be made by or on behalf of a person who has the qualifying interest in the premises.

(8) The regulations may provide for premises to be omitted from the register at the request of a person who has the qualifying interest in the premises.

Chapter 5: Ancillary Provisions

Section 16: Funding

(1) The Secretary of State, in consultation with the Treasury, shall appropriate the necessary funds at their discretion for the purposes and provisions of this Act.

Section 17: Enforcement Regulations

(1) The Secretary of State may set regulations, via secondary legislation, that make provisions for —

(a) an inspector to issue the following —
a compliance notice, and
a stop notice,

(b) where the Secretary of State or an inspector are to issue a monetary penalty notice.

(2) Regulations may provide for a requirement imposed by a stop notice to be enforceable, on the application of the Secretary of State, by injunction.

(3) Regulations under this Section must secure necessary review and appealment procedures are included.

(4) Regulations under this Section are subject to affirmative procedure.

Section 18: Compliance Notices

(1) Regulations which provide for the issue of a compliance notice must secure that —

(a) a compliance notice may only be issued where the issuing inspector of the notice is satisfied that person to whom it is issued has committed or is committing a relevant breach,
(b) the steps specified in relation to the notice are steps that the inspector considers will ensure that the relevant breach does not continue or reoccur, and
(c) the period specified in relation to the notice is not less than 14 days beginning on the day on which the notice is received.

Section 19: Stop Notices

(1) Regulations which provide for the issue of a stop notice must secure that —

(a) a stop notice may be issued to a person only where the inspector issuing the notice reasonably believes that the person to whom it is issued has committed or is likely to commit a relevant breach, and
(b) the steps specified in relation to stop notices are steps that the inspector issuing the notice considers will ensure that the specified activity will be carried on in a way that does not involve the person committing a relevant breach.

Section 20: Monetary Penalty Notices

(1) Regulations which provide for the issue of a monetary penalty notice must ensure that the Secretary of State or an inspector may issue a monetary penalty notice only where satisfied that the person to whom it is issued had committed a relevant breach.

(2) Regulations which provide for the issue of a monetary penalty notice must require the notice to state —

(a) how the payment may be made,
(b) the period within which payment must be made, and
(c) the consequences of late payment or failure to pay.

(3) Regulations which provide for the issue of a monetary penalty notice may make provision —

(a) for the payment of interest on late payment,
(b) as to how any amounts payable by virtue of the regulations are to be recoverable.

Chapter 6: Final Provisions

Section 21: Extent, Commencement, and Short Title

(1) This Act extends to England.

(2) The provisions of this Act shall come into force the day this Act is passed, and has received Royal Assent.

(3) This Act may be cited as the ‘Flood Risk (Prevention and Insurance) Act’.

This Bill was Submitted by The Honourable Lady u/Waffel-lol LT CMG MP for Derbyshire & Nottinghamshire, and Spokesperson for Business, Trade & Innovation, and Energy & Net-Zero, on behalf of the Liberal Democrats with contributions from The Right Honourable /u/Hobnob88">Lord Inverness.

Referenced and Inspired Legislation

Financial Services and Markets Act 2000

Commissioners for Revenue and Customs Act 2005

Water Act 2014

Flooding (Prevention and Insurance) Bill

Opening Speech:

Deputy Speaker,

The Liberal Democrats are proud to be addressing a matter that directly affects the plights of our constituents and their local communities. And this is the grave risk that flooding plays. As it stands the United Kingdom has not reviewed its flood prevention and mitigation measures in over a decade. This is unacceptable. Which is why we have brought forward this comprehensive bill which aims to tackle this and more by empowering Government and local communities in mitigating the impact of floods and improving our preventive capabilities.

In Chapter 2, our bill mandates the establishing of minimum standards for new properties, emphasising property flood resilience, flood mitigation, and waste management as key components of proposed standards. This adopts a forward-looking approach which ensures that our homes and businesses are constructed with resilience in mind, reducing the impact of floods on our communities. underscores the importance of transparency in addressing risk management by obligating the Secretary of State and local authorities to make flood prevention and risk data publicly available. A decision which not only aids insurers in accurately assessing risk but also empowers property owners to make informed decisions about flood resilience measures.

Chapter 3 introduces the Flood Reinsurance Scheme. A scheme which is a strategic initiative to promote the availability and affordability of flood insurance. By managing the transition to risk-reflective pricing over time, the scheme aims to strike a balance that benefits both insurers and policyholders. Section 7 outlines the responsibilities of the Scheme Administrator, emphasising efficiency, public interest, and displaying that gradual shift toward risk-reflective pricing. The regulations also ensure accountability through audits and examinations, promoting transparency and responsible financial management. Furthermore, it is important to enhance the effectiveness of the Flood Reinsurance Scheme, which is why this chapter allows for the disclosure of relevant information from Her Majesty's Revenue and Customs and business rates, respectively.

We understand that climate change and other environmental conditions have left key areas of the U.K. naturally vulnerable to flooding which is why it is important we cover this. This is why chapter 4 establishes flood insurance obligations, requiring relevant insurers to issue policies covering a prescribed number of registered premises against flood risks. In monitoring this, this is where we further create a register of premises subject to greater flood risk, a crucial tool for managing and disclosing information about flood-prone areas. As this register promotes transparency, aids insurers in risk assessment, and ensures that relevant stakeholders are well-informed. By combining preventive measures, transparent data sharing, and a robust reinsurance scheme, this bill sets the stage for a more resilient and secure future for our local communities and adapting to the effects of climate change. Which is why we urge the House to pass this landmark legislation in flood risk management.

This division will end at 10pm on the 31st January.