EU antitrust regulators approves UK flood reinsurance scheme

BRUSSELS (Reuters) - The European Commission approved on Thursday a UK reinsurance scheme aimed at ensuring affordable insurance for flood-related damage, saying it was compatible with EU state aid rules. The scheme will set up a pool to provide reinsurance for the flood risk element for households deemed to be at high risk of flooding. It will be partly funded by an industry-wide levy, which could confer an economic advantage to the pool over its competitors. "However, the Commission has concluded that the scheme is compatible with EU state aid rules, because such insurance cover might not otherwise be sufficiently available on the private market, and the scheme remedies the market failure without unduly distorting competition," the Commission said in a statement. The Commission also said the scheme was open to all companies providing domestic property insurance in Britain and that it was transitory, designed to be phased out after an estimated 20 to 25 years, by when more effective flood defences should be in place. (Reporting By Philip Blenkinsop, editing by Julia Fioretti)