LONDON Feb 11 Insurers in flood-hit Britain may
raise premiums if storms continue to batter the country in the
coming weeks, a senior insurance executive warned.
Parts of the country, particularly south-west England, have
had their wettest January on record and around 5,000 homes have
been flooded, with some remaining under water for more than a
For now, insurers say they are not experiencing unusual
volumes of claims for the time of year and losses are still far
short of the 3 billion pounds ($4.9 billion) paid out after
summer floods in 2007. Specialists at PwC and Deloitte estimate
insured losses could be around 500 million pounds.
However with no end in sight to the wet weather, Steve
Langan, Managing Director of Hiscox UK and Europe,
warned premiums may have to rise as losses from claims mount.
"In the medium term we wouldn't expect the current UK floods
to have an impact on premiums. However if this adverse weather
continues into mid-February and mid-March, and we start talking
about a 1 billion pounds impact, then it will change the point
of pricing," he said.
Insurers say much of the flooding is currently in low-lying
areas already well known to be at risk and they have set their
pricing models accordingly.
However they could face larger claims now flood waters have
reached the south-western suburbs of London which are on the
banks of the swollen River Thames and home to some of Britain's
most expensive real estate, analysts warn.
"Once we note parts of the Thames flooding then we believe
that things could get materially tougher for the industry ...
the housing levels are more dense and the insured values are
getting higher," said Shore Capital Stockbrokers insurance
industry specialist Eamonn Flanagan.
The rising Thames also increases the chances of suburban
town centres being inundated, which could potentially trigger a
wave of very large claims for disruption to businesses.
Britain's biggest listed insurers, such as Aviva, RSA
and Direct Line, are all due to report
full-year earnings in coming weeks and are unlikely to provide
any updates before then.
The storms, which started in December, are not expected to
materially affect 2013 results as they came after a long hot
summer, amounting to a quiet year overall.
However, with losses continuing into the current year,
insurers' trading figures for the first quarter of the year
could make uncomfortable reading for investors.
"The continued adverse weather highlights the impact that
storms, coastal and river flooding, and flash flooding can have
on the British economy and the UK insurance industry," said Dom
Del Re, insurance catastrophe expert at PwC.