Thats not really "gaming the market"
Flood Re works as a reinsurer of last resort at the national level.
Essentially,
Primary insurers write home insurance that has covers flood risk for £x
The actual cost of the flood risk is £2x
The difference is effectively subsidised by Flood Re.
So its the taxpayers and industry that subsidise house building on flood plains.
With climate change, we are seeing an increase in the severity of the flooding events, which then result in higher financial losses.
Thats why the flood risk component of home insurance will keep increasing (insurance cost for homes in flood plains will shoot up), as will the subsidy from the taxpayer for Flood Re.
Moral of the story:
Building in flood plains is cheaper for housebuilders and good for NIMBYs (who avoid buildings near them on non-flood plains), but in the end we all pay higher home insurance and taxes to subsidise that.
Britain is basically broken. Has been for a long time due to the housing situation. It has horrriby skewed the economy over the last 20 years and now its starting to fall apart due to demographics.
My advice is get out of the UK if you can.