Aviva and RSA Face £230m in Flood Claims
by Gill Montia
Story link: Aviva and RSA Face £230m in Flood Claims
The damaged caused by the recent weeks of torrential rain will leave two of the UK’s top household insurers facing claims for flood damage that are likely to be in excess of £230 million.
The owner of Norwich Union, Aviva, estimates it will be paying out over £175 million in claims, given that it holds a 20% share of the UK home insurance market.
Royal & SunAlliance (RSA), as the UK’s largest commercial insurer, is anticipating claims of £55 million.
The scale of damage has not been seen in the past 50 years; only two incidents of serious flooding have occurred in the past five years, the most notable of which devastated the city of Carlisle, in 2005.
Aviva is in agreement with the Environment Agency in categorizing recent weather conditions as a once in a 150-year event, and the group acknowledges that its best estimate of £175 million could rise if heavy rain persists.
In addition, despite having received over 13,000 claims from its customers Aviva has pointed out that some property owners have not yet been able to return to their homes to assess the damage.
Financial results for Aviva’s general insurance division are expected to be affected in the first half of the 2007/08 financial year, but the group does not expect to include the costs as an exceptional item.
RSA will be in a similar position, with the impact of the floods claims showing in its first-half results.
The Association of British Insurers has already estimated that the total bill for the flood damage will reach £1 billion.