UK insurance sector calls for more adverse weather protection
The UK insurance sector has called for more adverse weather protection as a “challenging new era” places increasing pressure on insurers.
In the first quarter of 2025, British insurers paid out a record high of £226m in weather-related claims, surpassing the previously held record of £67m in 2022.
Industry paid an eye-watering £585m for weather-related damages to homes and possessions in 2024, according to the Association of British Insurers (ABI), as increasingly harmful weather continues to affect UK properties.
Bad weather increasing costs
An increase in flood events, problems caused by climate change and bad weather has left UK insurers grappling with surging costs, leaving the industry, including government scheme Flood Re, calling for further investment into flood protection by the government.
Kelly Ostler-Coyle, Director of Corporate Affairs at Flood Re, commented: “The increasing frequency and severity of flooding events driven by climate change is placing unprecedented pressure on UK insurers, making Flood Re’s mission more important than ever.”
“However, we are entering a challenging new era, facing both rising claims costs and a significantly more constrained global reinsurance market.”
Flood Re has committed to making flood insurance more affordable, particularly for those in flood prone areas, with 99 per cent of households in high-risk areas now able to obtain competitive quotes from 15 or more insurers, up from just eight per cent, since its 2016 inception.
Pledge for defence
The industry welcomed the government pledge of £4.2bn for flood defence over the next three years in the recent June Spending Review, with the ABI calling it a “crucial step” in building climate resilience.
However, they warned of the dangers of building on flood-prone land, as the government’s efforts to build 1.5m homes in the next five years begin.
“As the drive to build 1.5m new homes gets underway, location and design must be carefully considered. Every house needs to be able to withstand flooding, extreme heat, stronger winds and subsidence, and must not be built in flood-risk areas,” an ABI spokesperson said.
While flood insurance allows claimants to receive pay outs from damage, the ABI stressed the importance of property maintenance, with claimants responsible for the home’s condition prior to repair, as it does not fall under home insurance conditions.
“Only through sustained investment and proactive planning can we mitigate future risks and safeguard our communities against escalating climate threats” they added.
Despite Flood Re pledging affordable insurance for those in high risk areas, consumers who live in newly built property on flood risk land, face potential higher insurance costs, as only properties built prior to 2009 fall under the scheme’s jurisdiction.
Stopping the flood
A recent report from insurance group, Axa, who are signed up Flood Re’s Build Back Better scheme, found that homes and businesses most at risk from adverse weather could face financial costs of up to £818m by 2055, yet over 50 per cent of home owners feel unprepared to deal with the impact of flooding on their property, as well as extreme heat.
Adam Holland, Head of Product, AXA Retail said: “Flood damage repairs cost an average of £36,000 and storm damage costs over £1,000 to repair, so improving a property’s flood resilience will help keep the expense of flood-related damage to a minimum and make the drying out and cleaning process much simpler.”
“It’s vital to protect vulnerable communities from potential flood risk.”