Lower Marsham · part 2 of 7
The Tariff of 1991
Lower Marsham, Episode Two. On the Hall, a flat in Halifax, and the year the water was told to stop counting
Marsham Hall sits closest to the river of any house in the village, behind a screen of willows planted by an ancestor who understood the situation perfectly. It is a lovely thing, Grade II listed, seven bedrooms, and it has made three insurance claims since the millennium. Having flooded three times in that span, the loss adjusters know the Hall by its first name. The most recent claim ran well into six figures, as claims do when the water gets among the parquet and the portraits.
The Hall’s flood reinsurance is priced according to a document created in 1991. Not updated since 1991; created then, frozen then, and consulted ever since with the reverence owed to scripture. Under Flood Re, the tariff an insurer pays to cede a property’s flood risk is set by council tax band, and council tax bands rest on valuations conducted when John Major was newly in office. The schedule of premiums for the coming year run from £192 for a Band A terrace to £1,613 for a Band H estate, and the Hall, at the top of the 1991 tree, pays the ceiling: £1,613, for a house whose claims arrive in multiples of a hundred thousand.
Now travel two hundred miles north, to a Band A flat on a hill in Halifax. The flat has never flooded. The flat could not flood without a change in the geological arrangements of West Yorkshire. Its owner, a nurse, pays her contents and buildings premium each month, and inside that premium sits her share of the levy that funds the pool: roughly £10.50 a year, drawn from every household policy in Britain, £160 million in all. She has never heard of Flood Re. She is one of its principal shareholders, in the sense that matters, which is the paying sense.
What the band knows
Consider what a council tax band actually knows about water. Nothing. It knows what a house was worth in 1991, coarsely, in eight steps. Two Band D houses attract the identical £263 tariff whether the first floods one year in ten and the second one year in a thousand. The risk signal has been replaced with a wealth signal, and the wealth signal is thirty-five years out of date. An actuary looking at this schedule for the first time tends to go through the stages of grief in the wrong order.
The distributional consequences are not subtle, and the striking thing is that you do not need a critic to describe them, because the scheme’s own chief executive has done it on the record. Band H properties, the Halls of England, make up 0.6 per cent of the national housing stock and roughly 12 per cent of Flood Re’s book: a twentyfold overrepresentation of the largest, riskiest, most expensive houses in the pool. These are households paying around £1,000 a year in premiums and making, in his phrase, “claims in the millions of pounds.” The direction of the money, again in his words: “from poorer people in the north to some of Britain’s richest boroughs in the country’s south.” When the head of an institution volunteers a sentence like that about his own scheme, the polemicist’s job reduces to arranging the furniture around it.
The Bank of England’s evidence on house prices, that this series met in Episode One, sharpens the point. The scheme’s uplift to property values shows up strongly for properties above the 60th percentile of prices; below it, the effects are limited and statistically insignificant. Measured against household income, the housing wealth effect lands at 14.2 per cent of average annual income in high-income local authorities and 3.8 per cent in low-income ones. A subsidy marketed on the image of a pensioner in a terraced house delivers its capital gains, in the main, to the willow-screened end of the market. The pensioner receives the marketing.
One claim in eight paid by the scheme is for a property that has flooded before. The Hall, in other words, is not an outlier that slipped through; repeat business is a structural feature of a pool that charges the same tariff after the third inundation as before the first. It is worth being fair here: Flood Re has noticed the skew, and its recent premium schedules loaded the largest increases onto Bands F to H, with Band H now pressed against its regulatory cap. But a cap is a confession. If £1,613 were an adequate price for the Hall’s acquaintance with the river, there would be no need to forbid charging more.
None of the individuals in this arrangement is behaving badly, which by now the reader will recognise as the signature of the genre. The Hall’s owners pay what they are asked. The nurse pays what she is asked, without being told what for. The insurers cede at the published tariff. The unfairness lives entirely in the schedule, and the schedule is nobody; it was laid before Parliament, which is where accountability goes to be laundered. A private insurer that priced a nurse’s flat to restore a millionaire’s parquet would be a scandal. Arrange the same flow through a statutory levy and a 1991 valuation list and it becomes an annual report — one with, credit where due, admirably candid quotes.
The confession of July
And then, this July, on its tenth anniversary, the scheme confessed at length. The reform package announced by Flood Re and Defra reads like a settlement of this episode’s charges, clause by clause, and its own stated rationale could have been lifted from the paragraphs above: in three of the last four years, the pool spent more repairing homes in Bands G and H — under four per cent of the housing stock — than in Bands A and B, which are forty-five per cent of it. The remedies follow the admission. The contents-only tariff for Bands A and B, the nurse’s end of the schedule, is to be more than halved, from £52 to £25, from April 2027, with insurers “expected” to pass the saving to customers, an expectation the reader is invited to price for themselves. The premium structure across the other bands is to be revised from 2028 “to better balance between wealthier and poorer households,” which is the chief executive’s north-to-south sentence translated into the future tense. And the exhibit that forced the issue: the minister cited, as the exemplary problem, a £3 million claim in 2025 for a single luxury property. The Hall, in other words, has been named in dispatches, and a cap on the value of any one claim passed to the pool is to be agreed with the industry by 2028 — the number itself unpublished, being still under negotiation with the people who will pay it. A cap, the reader will recall from a few paragraphs ago, is a confession. This one is signed.
Judge it fairly, because fairness costs the argument nothing. A scheme that halves the tariff at the bottom, loads it at the top, and declines the Hall’s next parquet above a ceiling is a better scheme than the one this episode describes, and the officials who carried the package deserve the credit reformers rarely collect. But observe what has been rebalanced. The tariff is still a tariff; the band is still a band; the valuation is still 1991. The reform corrects how the wealth signal is read and leaves the risk signal exactly where the scheme put it in 2016, which is nowhere. Two Band D houses, one wet and one dry, will pay the identical revised premium in 2029 as serenely as they pay the identical unrevised one today. The scheme has agreed, in public, that it was taking money from the wrong people. It has not yet conceded that it was charging them for the wrong thing.
The river at the foot of the Hall’s lawn takes a professional interest in Band H. She was there in 1991, unvalued, and she has appreciated considerably since. The river has not read the council tax valuation list. She conducts her own assessments, at irregular intervals, and hers include the parquet.
Principal sources: Flood Re premium schedules 2025/26; Flood Re Annual Report 2025/26 and CEO remarks (March 2026); Flood Re/Defra reform announcement (1 July 2026); Garbarino, Guin and Lee, Bank of England SWP 995. Next in the series: The Estate Beyond the Willows, on the safeguard that was supposed to hold.