Severe flooding this winter could cost UK insurers up to £1.6 billion, according to a recent analysis by PwC.
Most costly floods, in terms of insurance costs, that took place over the last decade, occurred during the winter of 2015-16 which saw Storms Desmond, Eva and Frank impact homes and businesses across the UK.
Storm Eunice, which impacted the UK in February of this year, led to insurers losing between £200 to £350 million, mainly as a result of travel disruption, which included the cancellation of flights and trains, and damage to properties and vehicles due to falling trees and flying debris.
Mohammad Khan, General Insurance Leader at PwC UK, said: “We’ve been somewhat fortunate that the warmer autumn has held back some of the more impactful weather events, however as we approach the end of the year it’s likely that we will see an uptick in extreme weather.
“Our analysis shows that losses from previous storms and floods in today’s terms would have caused significant repercussions resulting in costs hitting over one billion pounds.”
PwC’s research comes as the British Red Cross warns that the UK is not ready for worsening floods as one in seven households do not hold building or content insurance.
The lack of coverage comes despite schemes such as Flood Re, an initiative between the Government and insurers which aims to offer low priced insurance to those deemed to be at significant risk of flooding.
Khan said: “Thankfully, households in most at-risk flood zones have been able to obtain more affordable insurance, which protects them against flood risk, via Flood Re. However, Flood Re – due to restrictions that were put in when it was set up – does not reinsure commercial properties, homes built from 1 January 2009, and blocks of more than three residential flats.
“Many houses and flats built since 2009 are susceptible to flooding and it’s imperative that policyholders, communities, government and the industry come together to ensure that we do all we can to ensure that households are well equipped to cope with both current and future flood risks.”
