UK insurers could face losses of up to £1.2bn following the recent winter floods and storms, according to Fitch Rating, however, these are expected to be manageable.
In a report published on Monday, Fitch noted that insurers tended to be large and well diversified and have the ability to offset losses through other lines of the non-life insurance industry, like motor underwriting.
Fitch's UK non-life: company market dashboard reveals that insurers with a significant amount of personal property business including - UK Insurance Ltd; RSA; and Aviva - will be the most affected by the weather-related events that battered most of central and southern England between December and February this year.
'The overall cost to the industry should fall with previously published estimates of £1.2bn, if the insurer-reported loss figures to date are in line with those companies' respective market shares,' Fitch noted.
'This view recognises that the insurers are typically large, well-diversified players with the ability to offset losses through other profitable lines and to capitalise on price increases post-event thanks to strong capital levels.'
An Association of British Insurers spokesman told The Actuary that it was too early to say what the total costs would be following the bad weather of late January and February, as claims were still being dealt with by insurers and claims adjusters.
'It can take weeks or months for the flood damaged properties to fully dry out and repairs to them start,' he said.
The ABI’s latest figures on insured losses were released at the end of January, which covers the period December 23 to January 8.
'We expect more recent figures on the level and number of claims in the coming weeks. The ABI prefers to deal with actual claims from our members, rather than speculating on the potential total of damage done during the recent flooding,' the spokesman added.
Commenting on Fitch's estimates, a Direct Line spokeswoman told The Actuary that claims arising from major weather events in 2013 were down 34% to £69m, compared to £105m in 2012 with the vast majority occurring in the fourth quarter. But adverse weather conditions continued in the first quarter of 2014 resulting in further storm damage and severe flooding, she said.
Echoing the ABI, she said: 'While it is too early to assess with accuracy, our preliminary estimate for the cost of home claims up to February 22 is in the range of £70m to £90m. This compares to an expectation in an average year of £80m of claims from major weather events.'
'Furthermore, with elevated ground water levels the potential for future claims is increased in the event of further storms.'
Martyn Foulds, senior claims manager at Lloyds banking group, said: 'As many areas still remain under water, our personal claims consultants continue to work tirelessly to ensure customers get their lives back on track.
'It is still too early to predict what the cost of the winter storms and floods will be, and our priority is to ensure customers homes are back to normal as soon as possible,' he told The Actuary.
