Rising drought frequency across the UK is pushing subsidence claims to record levels and exposing a widening underinsurance gap in property cover, according to the Building Cost Information Service (BCIS).
Half of England has been declared in drought this year, and insurers are already tracking a pattern that mirrors 2025, when subsidence payouts reached a record £307 million. The Association of British Insurers' first-quarter 2026 data put the average settled subsidence claim at £17,820, the highest figure on record and up 9% year on year from £16,295. Subsidence claims totalled £153 million in the first half of this year, supporting almost 9,000 households at an average payout of £17,263.
A third UK heatwave in 2026, combined with central England's longest dry spell since June 1996, has revived concerns among property insurers about a repeat subsidence surge, a year after payouts hit the £307 million record. Steven Coxon, head of subsidence at Claims Consortium Group, has identified three surge years since 2018, 2018, 2022 and 2025, and said ground conditions in early 2026 remained damaged from the previous year's weather, pointing to a similar picture developing again. Deloitte has identified 2025 as a record year for UK property insurers, with weather-related claims, including flood, storm and subsidence, reaching an estimated £1.6 billion, more than double annual levels seen between 2017 and 2021.
Alison Williams, managing director at Prestige Underwriting, said prolonged heat and drought were becoming a growing concern, particularly within the non-standard property market, where older or specialist-material homes are more vulnerable to structural movement.
Cos Kamasho, principal consultant at BCIS, said the built environment is being exposed to risks that were once uncommon. "Climate breakdown in the UK is increasing the frequency and intensity of environmental hazards, exposing our built environment to risks that were once relatively uncommon," Kamasho said. "Recurrent drought and resulting soil shrinkages and subsidence are one example, alongside more frequent and severe river and coastal flooding."
Kamasho said insurers and policyholders face a compounding problem, as both climate-related risk and repair costs rise together. "Insurers and policyholders face a challenging situation. Both climate-related risks and the cost of repairing or rebuilding damaged property are increasing," he said, pointing to geopolitical instability, higher materials costs and regulatory changes as drivers of construction cost inflation.
Kamasho warned that if rebuild costs are not reassessed accurately at policy inception or renewal, buildings risk being underinsured. "Now more than ever, access to robust, high-integrity rebuilding cost data is vital," he said, adding that such data helps insurers price renewals with confidence and set sums insured that reflect true rebuilding costs. For brokers, that's a specific, executable step rather than a general caution: requesting updated rebuild-cost data at the next renewal survey, rather than relying on an indexed adjustment to a valuation set several years ago, is the concrete action that directly addresses the underinsurance gap Kamasho is describing.
The warning lands amid a wider pricing tension. Guy Carpenter said abundant reinsurer capacity is driving a progressively competitive pricing environment in the traditional property market, with risk-adjusted decreases deepening since January 1, 2026 and the global property catastrophe rate-on-line index down 16%. Yet primary claims severity is climbing: the average household claim reached £6,340 in the first quarter of 2026, up 20% year on year, with weather-related damage claims up 38% over the same period, according to ABI figures.
Brokers advising clients in clay-soil regions or agricultural areas have a narrowing window to review excess structures and natural peril exclusions before the next renewal cycle, rather than waiting for a claim to surface the gap.
