Flooding in Northern England could cost industry £120m: PwC
Flooding in Northern England could cost the re/insurance industry £80m and £120m, according to professional services company PwC.
The extreme weather in Northern England has caused significant damage, causing more than 500 properties to be flooded and 1,200 households to be evacuated. PwC said the number of properties that have been flooded will probably increase with further rain forecast adding to the flood damage that has already occurred.
"This is clearly a very difficult time for those who have been impacted by the floods,” said Mohammad Khan, general insurance leader at PwC. “However, the UK insurance industry is better prepared for the floods that have occurred and is responding as quickly as possible to ensure that affected policyholders are having their needs met.”
He added that due to the number of significant floods that have occurred since the flooding of 2007, the industry is much better prepared in helping affected policyholders quickly in dealing with this extreme weather.
"Although it is still early to estimate the full losses from these floods, the losses to date could see the insurance industry paying out between £80m and £120m in claims for both people's homes and affected businesses,” he said. “This estimate could rise over the coming days depending on how much further rain falls over the rest of the week."
Before Flood Re, the joint initiative between the UK Government and the insurance industry to make the flood part of household insurance more affordable, policyholders that were flooded saw significant increases - sometimes by thousands of pounds - in insurance premiums.
PwC said it would not expect to see anywhere close to this level of premium increase for flood affected policyholders. Those policyholders who shop around may be able to match their current premium, but most could see a modest increase in price.
"Currently the household insurance market is very competitive with many insurers trying to grow their share of the sector,” said Khan. “These firms are often writing premiums for new policyholders at a loss to bring in new business despite household insurance claims costs rising in recent years. Given the competitiveness of the sector, non-flood affected customers who shop around may be able to match last year’s premiums.”
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