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 month.
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.