DAILY NEWS Nov 29, 2012 9:07 AM - 0 comments

U.K. floods could cause premiums for certain areas to skyrocket: PwC

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2012-11-29

Some of the worst-affected areas in the wake of heavy rainfall and widespread flooding in the United Kingdom could see insurance premiums rise by as much as 50%, PwC reported on Wednesday.

Flood cleanup

“Following the latest floods to strike the U.K., we expect insurance renewal premiums to rise between 10% and 50% depending on the severity of flood damage caused,” comments Mohammad Khan, an insurance partner at PwC.

Read more: UK flood risk set to rise significantly by 2035

“Even those not affected are very likely to see their premiums rise by up to 5%; flood damage, therefore, is not just a problem for those currently affected, but one for the U.K. as a whole,” Khan continues in a statement from PwC, firms of which provide industry-focused assurance, tax and advisory services.

AIR Worldwide reported on Tuesday that heavy rainfall began last week, prompting hundreds of flood warnings and alerts affecting almost every region in England and Wales. “The southwest areas of England, particularly the counties of Cornwall and Devon, have thus far borne the brunt of the rainfall, with some places recording over 150 mm of precipitation over the past seven days,” notes a statement from the catastrophe modelling firm.

At Exeter airport in Devon, for example, 39.2 mm of precipitation was recorded between midnight and 8 a.m. last Wednesday. That system was followed in short order by two more, bringing with them rain that fell on already saturated soils.

Read more: UK flood model best-suited for Canadian market, US the worst: ICLR

“Aside from the devastation to homes, businesses and the tragic loss of life in the affected regions, there has also been widespread disruption to rail and transport networks, including the partial closure of major motorways,” AIR reported.

U.K.’s Environment Agency reports in an update that approximately 1,100 properties have flooded since last Wednesday.

Although man properties have been flooded, the agency notes, flood defences have protected 52,000-plus homes.

Car in floodwater

AIR noted the defences were built following disastrous flooding in 2007.

Domenico del Re, a catastrophe expert at PwC, suggests in a statement that “legislation to ensure new builds in flood risk zones are built to specific flood-resilient requirements would be one solution to help limit future flood damage.”

At present, del Re points out, “planning laws only require a flood risk assessment when a new home is built.”

The current spate of heavy rains and flooding follows a summer in which the U.K. experienced multiple flooding events, AIR noted in its statement. Most of the summer’s floods were localized in nature, with estimates of insured losses totaling approximately £1 billion, it added.

“AIR estimates average annual insured losses of approximately £343 million, so 2012 is proving to be an above average year.”

Aerial view of flooding

Photos: Flooding in the United Kingdom in November 2012 (Credit: U.K. Environment Agency)



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