REC187-2942

That a flood risk reinsurance facility, or reinsurance pool, be established which would have two primary functions:
• to deliver discounts to home, contents and home unit insurance policies for eligible properties; and
• to provide flood reinsurance capacity to the insurance market;
and two key design features:
• an excess of loss arrangement whereby insurers retain and price a ‘first loss’ portion of each policy on a commercial basis; and
• a ‘facultative/obligatory’ reinsurance treaty that would allow insurers to cede individual properties to the pool if they wish (facultative offer) but the pool would be obliged to accept them (obligatory acceptance).