Canadian Underwriter

Initial U.K. loss estimate is 717 million for flooding following December storm: PERILS

January 15, 2016   by Canadian Underwriter

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The United Kingdom losses for Desmond – the December storm that brought record-breaking rainfall and subsequent flooding to parts of the U.K. – have been estimated at £717 million, PERILS AG reported Friday.

U.K. loss estimate for storm Desmond released

Representing the first of four loss estimates that PERILS will release, the initial estimate for the U.K. – Ireland and Scandinavia were also affected by wind and rain from the storm from Dec. 4-6 – relates to the insured property market loss for flood damage caused by storm Desmond for the Dec. 4-24 period, notes a statement Friday from the independent Zurich-based organization that provides industry-wide natural catastrophe exposure and claims data.

Windstorm losses from the event – which also goes by the names Ted, Helga and Synne – are estimated at £42 million, although losses from the peril of windstorm do not qualify for further reporting by PERILS.

The U.K.’s record-breaking rainfall in December “fell on ground already saturated from a series of depression systems during November,” the statement explains. “This led to severe flooding, which mainly affected the counties of Cumbria and Lancashire in Northwest England, with flood waters peaking” on Dec. 5 and 6.

The rainfall peaks over the Lake District in Cumbria exceeded historical records.

In light of the record-breaking amount of rain falling on water-saturated soil following an exceptionally wet November, “it is no surprise that extensive flooding occurred from overflowing rivers and surface water run-off,” Luzi Hitz, CEO of PERILS, says in the statement. “After 2005 and 2009, this is the third time that the Northwest of England has been affected by severe floods,” Hitz reports.

“After careful investigation and numerous discussions with data-providing insurance companies and other key market players, we concluded that for our initial estimate we would view the flooding from Desmond as an event on its own,” notes Eduard Held, PERILS’ head of products.

“In subsequent loss reports, and in line with our approach of applying the prevailing event definition used by the re/insurance markets, we may need to combine the flood losses from storm Desmond with flood losses from later events,” he adds.

The second loss report for Desmond is scheduled for release Mar. 4. The third loss report, due June 4, will contain loss data by CRESTA zone, and by the property sub-lines: Residential and Commercial. [click image below to enlarge]

Initial U.K. loss estimate for Desmond released

It is possible that for these subsequent loss reports, PERILS may need to re-evaluate the loss aggregation period to take into account the flooding resulting from storms “Eva” and “Frank” later in December.