Flood overtakes heat as major UK insurance risk

by Gill Montia

Story link: Flood overtakes heat as major UK insurance risk

EMB, the actuarial and business consultancy, has reported that flooding is now the major “act of nature” risk to the UK insurance industry.

According to research carried out by EMB through the country’s leading insurance companies, the hazard has moved into first place ahead of heat and wind.

Prior to 2007 UK insurers were dealing with a large number of subsidence claims caused by heat but a combination of increased rainfall and inadequate drainage has pushed flood claims ahead, relegating heat related claims to third place.

Karl Murphy a partner at EMB says: “The issue of flooding used to be a problem restricted to people living close to rivers and coasts … however 2007’s floods hit people previously unaffected by such conditions and companies are now having to modify their pricing strategies.”

With flood claims for 2007 costing the insurance industry around £2.5 billion, Mr Murphy warns: “Companies should not be resting on their laurels when calculating their pricing. By looking to implement the latest modelling techniques, businesses can incorporate third party data of flash flood risk assessment data by postcode to develop profitable pricing strategies for non-life risks.”