The Association of British Insurers (ABI) is reporting just shy of £1.19 billion in costs flowing from approximately 486,000 flood and storm damage claims that member insurers handled from homeowners, businesses and motorists in 2012, the wettest year on record for England and Wales, and the second wettest in the United Kingdom.
The average claim payout for flood-damaged properties – domestic and commercial – was £18,200 and, with respect to storm damage, £1,300, notes a statement last Friday from ABI, which has more than 300 members that together account for approximately 90% of premiums in the U.K. domestic market.
Flood and storm damage claims in 2012 represent the highest annual figure since the £3 billion paid out in 2007, the association notes. With regard to the 486,000 claims, insurers did the following:
- Domestic property: dealt with 411,300 claims for flood- and storm-damaged homes, paying out £690 million to repair damage and replace ruined possessions;
- Commercial property: handled 47,000 business property claims for flood and storm damage, paying out £373 million (another £40 million related to 1,200 business interruption claims was also paid out); and
- Motor vehicles: addressed 27,000 claims for flood- and storm-damaged vehicles, paying out £84 million to motor insurance customers.
“Insurers expect bad weather to strike anytime, anywhere and last year highlighted the vital role insurance plays in helping communities recover from our increasingly volatile weather,” Nick Starling, ABI’s director of general insurance, commented in the statement.
Cross-party political support is needed to ensure that the U.K. gets on top of the flood risk, ABI noted on Feb. 7, as part of a flood summit organized by U.K.’s Labour Party, at which Starling spoke. Last year was just short of being the wettest ever across the U.K., and four of the five wettest years on record have been since 2000.
“Flooding is the greatest natural threat facing the U.K. and the risk is rising, so political consensus on how we effectively adapt to it is essential,” Staling said at the time. “Political commitment in the key areas of investment in flood defences, sensible planning decisions and working in partnership with the insurance industry will ensure that flood risk communities get the protection and reassurance they need,” he emphasized.
Starling outlined key areas where cross-party agreement is needed:
- a rigorous planning system that prevents developments in high flood risk areas;
- sustained, long-term flood defence spending that keeps pace with the threat, targeted to areas of greatest need; and
- recognition that flood insurance can only continue to remain widely affordable and available with some form of government support.
Citing information from the Environment Agency, ABI reports that in England and Wales, one in six homes is at flood risk; more than 2.4 million properties are at risk of flood from the rivers and the sea (500,000 of these at significant risk); a further 2.8 million properties are at risk of surface water flooding alone; and more than 5 million people live or work in flood risk areas.