Storms and Brief Cold Spell Sent Insurance Claims Up in Early 2018

Bad weather insurance claims rocketed by 290%, in the first quarter as insurers helped customers hit by the Beast from the East, says the latest press info from the Association of British Insurers.

The so-called Beast from the East and Storm Emma that caused widespread disruption in late February and March led to property insurers paying out a record breaking amount in burst pipe claims in the first quarter of the year according to figures out today from the Association of British Insurers (ABI).

In the first quarter of 2018:

• In total, £1.25 billion was paid by insurers under domestic and commercial property insurance policies – the highest quarterly figure for two years
• Insurance pay-outs to homeowners and businesses for storm, flood and burst pipe damage jumped to £361million, a massive 290% rise on the £93 million paid in the previous quarter. Some 86,000 claims were handled, compared to 29,000 in the previous quarter
• £194 million was paid to help homeowners cope with the misery of burst pipes. This was the highest amount ever paid in a single quarter and compared to only £4 million paid out in quarter 4, 2017.
• On commercial insurance, weather damage and escape of water claims also rose, up to £188 million, compared to £107 million in the previous quarter.

Mark Shepherd, Assistant Director, Head of Property, Commercial and Specialist Lines, ABI, said:

“This winter definitely had a sting in the tail that was felt by thousands of homeowners and businesses. No matter how unpredictable the weather, insurers are always ready for it as these figures show. Whether it is for your home or your business premises, property insurance can be lifeline if the worst happens. And for some risks, like frozen and burst pipes, some simple preventative steps taken before the bad weather arrives can greatly reduce the threat.”

Insurance Edge Comment;

There was a depressingly huge amount of rainfall last winter, but not much snow, or  a prolonged cold spell where average daytime temperatures fell below freezing point. It was, in fact, a fairly mild winter overall.

Those of us old enough to recall the winter of 1981-82, where there was snow on the ground from January to March, and temperatures dropped to minus 15 at night, can only imagine the scale of social media hysteria, and rolling TV news commentary criticising the insursance industry.  There would probably be complete social breakdown if we had a sever winter now, such is the pitiful helplessness of almost everyone aged under 30.

Unlike 35 years ago, we now live in a country where the housing sector is dominated by apartments, not houses, and the potential for a single burst pipe affecting several properties is much greater. Building standards now mean pipes are hidden, not exposed, in bathrooms and kitchens, making repair more difficult, and therefore expensive.

The solution lies in automated systems, where cameras and sensors alert those living in the house/flat that there is a water/electrical problem, and guide them via phone app to the shut off valve. The insurance sector should work closely with the water industry, and Ofwat, on finding ways to detect leaks and deal with problems quickly, and establish protocols which apportion responsibility in the clearest terms possible.