ABI expects insurers to pay out almost £500m to meet February storm claims

The damage caused by Storms Dudley, Eunice and Franklin that hit much of the UK during February is expected to lead to insurers paying out nearly £500 million in dealing with 177,000 insurance claims, according to the Association of British Insurers (ABI).

Figures from the ABI show that there have been 177,000 claims notified for damaged homes, businesses and vehicles, with total payouts of £497 million expected. Of these claims, 169,500 relate to property damage costing £473 million.

There were also 7,522 claims for damage caused to vehicles, leading to incurred claims worth £23 million.

This overall payout figure compares to the estimated £543 million paid in storm and flood claims following Storms Ciara, Dennis and Jorge in February 2020.

Insurers have so far responded with emergency payments worth £13 million to relieve immediate hardship.

The ABI estimates that £2.2 million will be paid in arranging alternative temporary accommodation for policyholders whose homes were uninhabitable while repairs being carried out.

Sarah Brodie, senior policy adviser for general insurance at the ABI, commented: “Storms and floods are exactly the type of unwelcome event that insurance protects against.”

Brodie continued: “When bad weather strikes, the priority for insurers is always do all they can to help their customers recover from what can be a traumatic and costly experience as quickly as possible.” 

“From making immediate emergency payments where needed, arranging temporary alternative accommodation while badly damaged properties are being repaired, to organising repairs, insurers continue to support their customers whenever storms strike.”

Responding to the ABI figures, Rebecca Rogers, head of property claims at Allianz Commercial, said: “We experienced a claims surge in February as Storm Eunice blew exceptionally strong winds over the UK and Storm Franklin caused flooding in several regions. However, we were well prepared for this.”

Rogers added that Allianz Commercial’s “one-touch settlement approach” made a significant difference to how the insurer responded to the damage resulting from the storms.

She said: “Thanks to precise geospatial forecasts, our claims handlers were fully mobilised and our loss adjusting partners were on call. We had a simplified process for storm claims and in the most affected locations, we proactively liaised with brokers so they knew which information we needed to handle the claim from the first notification of loss.”

“That’s our one-touch settlement approach and we’re very grateful for brokers who’ve supported this as it made a big difference in how quickly our customers have been able to recover.”

“We stressed the importance to customers to notify their brokers or insurers as quickly as possible for all commercial property claims and especially during surge conditions as the earlier we are notified of a claim, the quicker we can provide our customers with full support including suitable repair options. This results in getting their business back up and running quickly and reduces the lifecycle of the claim.”

With climate change affecting more extreme weather patterns, the ABI is hosting its Climate Change Summit on 8 June to review progress of the insurance and long-term savings industry in driving forward the sector’s climate change commitments, following the publication of the Climate Change Roadmap on July 2021.

Ben Wilson, director of corporate affairs and climate change at the ABI, said: “The Environment Agency projects that winter rainfall could increase by between 6 and 13%, while the sea level rises by at least 23cm—at a time when the number of properties on flood plains is projected to double. The scale of this challenge demands that we maintain our sector’s focus on net zero and delivering our Climate Change Roadmap.”

“Even if the Paris goals are met, our planet will experience major disruption due to rising temperatures. It is vital that the role of the insurance sector in helping property owners recover from the impacts of flooding should be complemented with greater investment in building and maintaining flood defences and a more coordinated approach to planning policy.” 

Rogers from Allianz Commercial added: “We’re conscious that climate change is making this type of extreme weather events more frequent, so we’re more determined than ever in pursuing our sustainability agenda.”

“In property claims, that means using green methods of reinstatement and encouraging customers to access flood resilience grants, for instance. As a business, we’ve been looking at our own operations and at our supply chain. As well as powering our UK offices with 100% renewable energy, we’ve rolled out a sustainable procurement charter that priorities suppliers who take ESG seriously and we’ve set up the Allianz Net Zero Accelerator to help independent brokers measure, reduce and offset their emissions.” 

Allianz Group has just announced plans to accelerated the deployment of its climate strategy and has made commitments in both its core business and operations.

The company will limit the greenhouse gas emissions deriving from Allianz’s sites and activities in more than 70 markets to net zero by 2030, instead of 2050 as originally planned. 

For its proprietary investment and property and casualty businesses, from 1 January 2023, Allianz will no longer invest in or underwrite new single-site or standalone oil and selected gas risks, oil and gas activities related to the Arctic and the Antarctic, or extra-heavy oil and ultra-deep-sea risks.

By the start of 2025, Allianz will also require a ‘net zero by 2050’ commitment from the largest hydrocarbon producers as a pre-condition for company-level insurance coverage and investments.

Image: Canva

Mark Dugdale