They say prevention is better than cure; in the world of insurance, perhaps you can say mitigation is better than payouts.
According to the Association of British Insurers (ABI), property insurance providers paid out £4.7 billion in claims in 2016, or nearly £13 million on a daily basis.
“That’s split by around £7.4 million in claims per day to households and around £5.5 million per day in commercial property insurance claims,” noted James Dalton, ABI director of general insurance policy.
Speaking at the British Damage Management Association’s property claims conference, Dalton said costs of property claims continue to cause concern, “even at a time of recent benign weather.” Third quarter statistics from the trade body pin total cost of claims incurred at £878 million, with the number of claims rising by around 13,000 compared to the second quarter.
“Domestic escape of water claims increased to £160 million for the quarter, and business interruption claims are the highest they have been since the first quarter of last year,” added Dalton. The ABI said the total cost of domestic escape of water claims surged by 24% between 2014 and 2016, from £529 million to £654 million.
As for flood insurance, Dalton believes we need to do more.
“Flood Re is not a solution to the problem of flooding and flood risk,” he explained. “There are an estimated two million homes in England that are at risk of river or coastal flooding, with an additional 2.4 million homes at risk of surface water flooding.
“The number of properties at risk is only increasing in the context of climate change and the limited Government investment in flood defence infrastructure. When you combine that with the fact that Flood Re has a limited lifespan of 25 years expiring in 2039, more needs to be done now to think about what a risk reflective flood insurance market looks like for the next generation.”
The ABI official said a key challenge is winning the argument with customers on the importance of resilient repairs and wider resistance measures.
“I don’t have the answers, but we need to work with our partners at Flood Re and in Government to ensure that, in the context of other policy priorities and short-term political thinking, the flood insurance challenge of the future is not forgotten,” he said.
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