The predicted cost to insurers of Storm Desmond has crept up, as continued bad weather threatens to cause even greater damage.
Professional services firm PwC, which yesterday estimated that the insurance costs would be between £175m and £250m, today suggested insurers could find themselves paying out between £250m and £325m.
“Clearly these are initial estimates as there is still uncertainty as to the number of properties and businesses affected,” said Mohammad Khan, general insurance leader at PwC UK.
“If the storm continues, the damage – and therefore the costs – could be significantly worse."
Any additional rainfall – even 1cm-2cm – could cause flash flooding in rain affected areas as the ground is already saturated with water. This could compound the damage that has already been caused by Storm Desmond.”
By comparison, audit giant has pointed out that flooding in 2009, which also badly affected Cumbria, set insurers back £175m.
Storm Desmond could even have ongoing implications for how insurers treat environment risks in the future.
Domenico Del Re, catastrophe risk management leader at PwC UK, added: “Although we have had significant flood and storm events in the UK over the last decade, this is the first time the Met Office has attributed these unprecedented levels of rainfall to changes in the climate.
"This has far reaching impacts on how the insurance industry assesses flood risk on a forward-looking basis. All flood events provide additional data and insight to be used in modelling, and the industry will need to assess if their current models capture any heightened risk.”
Meanwhile, Amanda Blanc, chief executive of Axa Insurance, remarked: “Although it is far too early to be estimating the cost of these latest floods with any accuracy, the nature of the flooding will probably mean that the average claim will cost more than usual.”