Cost of clean up after UK floods could hit £1 billion, insurers say
As rain continues to fall in Britain, more flooding is inevitable, and insurers say they may consider putting up premiums to cover the rise in payouts
The cost of clearing up in the UK after this winter’s floods and storms could rise to £1 billion (HK$12.7 billion) if rain continues to fall on water-logged ground and causes damage to more homes and businesses, an insurance expert has warned.
On Monday, multinational accountancy firm PricewaterhouseCoopers (PwC) revised up its forecast for the cost of flooding in December and January to £630 million, including a £500-million bill for the insurance industry. However, as the rain continued to fall in parts of the Southwest, and swelling rivers reached the outskirts of London, one insurer said the cost could easily increase.
“Many parts of the country are now saturated, which means further flooding is inevitable as the rain continues to fall. Parts of the Thames are now flooding too, affecting higher density areas,” said Justin Gott of insurance firm Hiscox. “If the rains continue into March or April, it’s not impossible for this to become a £1-billion event.”
James Rakow, an insurance partner at Deloitte, said he expected household insurance claims for flood damage to average £30,000 to £40,000 each.
While currently even on the highest estimates the bill is some way off the £3 billion the insurance industry is thought to have paid out following the floods that devastated huge swathes of the country in 2007, Rakow said insurers could consider putting up premiums to cover the cost.
“Claims from the current floods and storms are at a level where insurers will be looking at their finances to see what they need to do,” he said. “After the 2010 freeze we saw premiums rise by around 5 per cent to cover the cost.” That kind of rise would add between £10 and £15 to the average annual household insurance policy.
