UK home insurers hit by surge in weather damage claims

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A succession of severe storms last year left UK home insurers on the hook for £573mn in weather damage, the highest since the data began to be tracked seven years ago.

The record level of claims underscores the challenge that climate change poses to the industry and to homeowners through rising premiums.

High winds and flying debris from a series of storms, including Babet, Ciaran and Debi in October and November, left a trail of damage, with subsequent widespread flooding contributing £286mn to the bill, according to data published on Monday by the Association of British Insurers. 

“Extreme weather events may not feel so rare as they used to as we grapple with a changing climate,” said Louise Clark, a policy adviser at the ABI. Insurers would continue to press the government for further investment in flood defences and changes to the planning system to discourage building in at-risk areas, she added.

Overall, property insurers paid out £4.9bn to households and businesses last year, with more than half of that to homeowners. The weather-related damage to homes — as opposed to other sources of claims such as fire, break-ins and water leaks — was more than a third higher than the previous year. The ABI started to break out weather-related damage in 2017.

UK businesses, meanwhile, submitted £443mn of weather-related claims last year, around half the level of fire damage claims.

The insurance sector has been scrambling to respond to the rising frequency and severity of extreme weather linked to climate change, exacerbated by rebuilding cost inflation.

There were a record 37 extreme weather events around the world last year that led to payouts of more than $1bn each, according to figures from insurance broker Aon, with storms, floods and wildfires providing a particular challenge for underwriters.

In some of the worst-hit areas of the US, several insurers have pulled back from offering home insurance, contributing to an affordability crisis.

In the UK, insurers have pushed premiums higher in recent years to absorb a sharp rise in payouts. The latest ABI data showed that the average annual premium for a UK buildings and contents policy had risen by just under a fifth year-on-year to £364 in the fourth quarter.

The rising cost of home insurance and motor insurance has exacerbated cost-of-living pressures on households. Industry executives will appear before the House of Commons Treasury select committee on Wednesday to face questions over what they are doing to ensure cover remains affordable.


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