Severe flooding could cost insurers more than £1bn this winter
Severe flooding this winter could cost UK insurers more than £1bn, according to analysis from PwC.
Storm Eunice in February led to insurers losing £200-300m, mainly as a result of disruption to travel and damage to properties and vehicles due to falling trees.
However, floods on the same scale as those seen in 2015 would lead to insured losses of £1.6bn if they happened today, PwC said.
PwC’s general insurance leader Mohammad Khan noted: “We’ve been somewhat fortunate that the warmer autumn has held back some of the more impactful weather events.”
However, the PwC insurance expert noted that “as we approach the end of the year it’s likely that we will see an uptick in extreme weather.
“Our analysis shows that losses from previous storms and floods in today’s terms would have caused significant repercussions resulting in costs hitting over one billion pounds,” Khan said.
The analysis comes amid warnings from the British Red Cross that the UK is “ill-prepared” for worsening floods, despite early warnings the country is likely to experience flooding this winter and in early 2023.
The Red Cross warned 1.9m British people are currently at significant risk of flooding, as it noted this figure could double by the 2050s.
One-in-seven British people don’t have buildings or contents insurance – with half of those without insurance saying this was due to financial pressures, including the UK’s cost-of-living crisis.
The lack of coverage comes in spite of insurers not-for-profit Flood Re initiative, which offers low priced insurance to those deemed to be at significant risk of flooding.
“Thankfully, households in most at-risk flood zones have been able to obtain more affordable insurance, which protects them against flood risk, via Flood Re,” Khan said.
However, he noted the Flood Re scheme does not provide coverage to commercial properties or homes built after 1 January 2009.
“Many houses and flats built since 2009 are susceptible to flooding and it’s imperative that policyholders, communities, government and the industry come together to ensure that we do all we can to ensure that households are well equipped to cope with both current and future flood risks,” Khan said.