The insurance industry and the Government have reached an agreement about a pooled system for homes at risk of flooding.
It means legislation will be put before Parliament next year which will allow Flood Re to operate as a reinsurer.
The negotiations between the Association of British Insurers and the Government have also meant properties in council tax bands H and I are included in the scope of Flood Re.
ABI chairman Paul Evans said: “A year on from the floods that had such a devastating impact on home owners across the country, this is a great result that will ensure continued access to affordable insurance for all who were previously covered by our voluntary statement of principles.
“Today’s agreement has taken real determination from the insurance industry to develop the details of a workable proposal for Government, and a number of tough decisions have been necessary on both sides to make it a reality.”
Flood Re will provide a fund that will pay out claims made by flood risk households who without it would struggle to be able to get or afford flood insurance.
The ABI estimates that between 300,000 and 500,000 homes will benefit from the agreement.
According to the ABI insurers have invested £17m in getting Flood Re up and running.
Environment Secretary Elizabeth Truss said: “Whilst nothing can take away the distress that flooding can cause, having access to affordable insurance will give people peace of mind.
“For the first time, we will ensure access to affordable flood insurance for people regardless of where they live.”
Flood Re will also need regulatory approval from the FCA and the Prudential Regulation Authority.
