UK: Weather-related insurance claims hit record high £573m

In 2023, the UK experienced a significant increase in weather-related home insurance claims, surging by over a third from the previous year to reach an unprecedented total of £573 million, as reported by industry figures. This rise was largely attributed to a series of intense storms, including Babet, Ciaran, and Debi, that swept across the region, according to the Association of British Insurers (ABI). The total costs for repairs stemming from storm damage and other severe weather conditions in 2023 exceeded those of 2022 by £150 million, marking a substantial 10% increase in residential property claims settled that year.

This upward trend in claims also encompassed damages related to flooding and freezing conditions that led to burst pipes, with these incidents alone accounting for £153 million, predominantly occurring at the start of the year during the latter part of a harsh winter. Notably, the average payout for weather-related damages in 2023 was nearly £5,000, a significant rise from just over £3,000 the previous year.

While ABI’s records on these figures only date back to 2017, it is suggested that when adjusted for inflation, past years may have seen comparable levels of weather-related damage, particularly during the notable winter floods of 2015-16 and the summer floods of 2007.

Moving into 2024, the trend of challenging weather conditions has continued. PwC estimated that Storm Henk, occurring in early January, resulted in nearly £150 million in claims within just the first week. Furthermore, this January was recorded as the wettest in 250 years, although a relatively mild winter overall, including the warmest February on record, potentially mitigated the number of burst pipe claims.

Louise Clark, a policy adviser at the ABI, commented on the increasing frequency of extreme weather events, attributing them to climate change. She emphasized that insurers remain committed to supporting homeowners through these challenges, with payouts reaching record levels following a particularly difficult autumn and winter marked by numerous storms starting with Agnes, which caused extensive flooding. Despite ongoing insurance coverage providing a safety net, Clark highlighted the essential need for sustained investment in flood defense systems to cope with these emerging challenges.

Moreover, rising temperatures have also led to an increase in other types of insurance claims, such as a 45% rise in subsidence cases following the heatwave in the summer of 2022.

Overall, the ABI reported that total property insurance payouts across both homeowners and businesses amounted to £4.9 billion in 2023, with residential claims accounting for just over half of this figure, averaging around £13 million per day. Although the total number of claims remained relatively stable, the average claim paid out rose by 11% to £6,235 compared to 2022.

Despite an increase in premiums in 2023, the ABI noted that when adjusted for inflation, the average cost of combined buildings and contents insurance has actually decreased by 13% since 2017, suggesting some financial relief for policyholders amidst rising claims costs.

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