How much will the floods costs insurers?
The recent soaking that considerable chunks of the country received will cost the insurance industry around £1.2bn, according the ratings agency Fitch.
The losses relating to the floods will be “manageable”, Fitch said this morning, with the hit to insurers’ earnings remaining “limited”. It stressed firms are prepared for such events:
These insurers are typically large, well-diversified players with the ability to offset losses through other profitable lines, as well as being able to capitalise on price increases post-event.
If insurer-reported loss figures to date are in line with the market share for insurers, the recent floods will mean an increase in the sector’s combined ratio of 3.4 percentage points, the agency predicts.
Earnings will, however, remain under pressure from other areas, it said, with the underwriting performance of personal motor business likely to rely more and more on prior year reserves in order to sustain current performance. Earnings from investment will also stay subdued this year.