UK Flood Update

Insurers face their biggest UK flood bill in 20 years, after intense rain left swathes of central, northern and southern England under water. The latest flooding, saw Gloucestershire, parts of the Midlands, Oxfordshire and Bedfordshire worst affected by huge levels of rainfall, following similar scenes of devastation in Yorkshire, Lincolnshire and Wales towards the end of June.

Although fewer properties were affected in the July downpours, the cost to the insurance industry, due to a combination of factors such as higher claims and proportion of damage which is insured, together with business interruption caused by loss of power and running water, is likely to be greater than that expected for June. Aviva, the UK's biggest general insurer, has stated that its flood bill for both June and July is likely to be £340 million.

It is estimated that the recent floods have affected around 27,500 homes and 7,000 businesses. The increased number of business claims, coupled with clearer information about the amount of damage to the homes, led the Association of British Insurers (ABI) to revise its previous cost estimate to over £2 billion; at least as damaging as the major UK floods in 1990.

Insurers added extra staff to man their call centres 24 hours a day to handle the number of claims, while loss adjusters are still working flat out to assess the damage to properties. Priority in dealing with claims has been given to the elderly, disabled and young families. Apart from the damage to properties caused by the water, thousands of cars have been damaged, while further claims are likely because of electricity cuts after power stations were hit by flooding and by chaos caused to businesses by the weather.

(01 July 2007)

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