Weather-Induced Insurance Claims Hit Record High

The UK has seen a significant rise in insurance claims due to severe storms and heavy rainfall, hitting a seven-year high for property insurance payouts. According to the Association of British Insurers (ABI), a staggering £1.4 billion was paid out to homeowners and businesses between April and June 2024. This represents a 5% increase from the previous quarter and the highest figure since records began in 2017.

Insurers Hit by Surge of Claims

Adverse weather, particularly between October 2023 and March 2024, contributed to this surge in claims. The UK experienced its second wettest period on record, which caused extensive damage to homes and businesses nationwide. The ABI notes that the months from April to June marked the fifth consecutive quarter when weather-related claims passed the £100 million mark.

Damage from storms, heavy rain and frozen pipes accounted for £144 million in claims, making weather the predominant cause of property insurance payouts. The total cost was further inflated by issues such as subsidence, when the ground beneath a building sinks, pulling the foundations down with it.

Rising insurance premiums have created a dilemma for policyholders. The average insurance premium increased by 19% in the second quarter of 2024 compared to the previous year. This rise is partly attributed to the rising costs insurers face in a high-inflation market.

Consumers and business owners have expressed dissatisfaction with how some insurers have handled weather-related claims. Sam Richardson from consumer advocate Which? pointed out that customers are encountering delays when making claims: "While some insurers' prices are going up, research has found that some are prolonging customers' ordeals by failing to deal with claims in an appropriate manner."

In response, the ABI’s Louise Clark defended insurers, emphasising their efforts to provide "competitively priced” cover despite challenging conditions. She also urged the Government to take more proactive measures to address the root causes of flooding.

Due Diligence for Business Owners

With the increasing frequency and severity of bad weather in the UK, small business owners must take proactive steps to protect their properties. Here are some practical tips:

• Conduct Maintenance: Ensure your roof, gutters and drainage systems are well-maintained. Blocked gutters can cause water to overflow and damage your premises.

• Install Flood Defences: If your business is in a flood-prone area, consider investing in flood defences such as barriers and non-return valves for plumbing.

• Protect Pipes: Insulate pipes to prevent them from freezing and bursting during cold snaps. Ensure your central heating is serviced and in good working order.

• Create a Contingency Plan: Develop a plan to protect valuable equipment and data in the event of a flood or storm. This might include moving important items to higher ground or backing up data digitally.

• Review Insurance Policies: Regularly review your insurance policy to ensure it covers the total value of your property and its contents. Consider adding business interruption cover to protect against loss of income if your business is forced to close.

Insurance Cover Considerations for SMEs

When choosing an insurance policy to protect your business against extreme weather, it's essential to consider the following factors:

• Comprehensive Cover: Ensure your policy covers various weather-related events, including storms, floods and subsidence.

• Payout Limits: Check that the payout limits on your policy are sufficient to cover the total cost of repairs and replacements.

• Business Interruption: This cover is crucial for safeguarding against loss of income if your business is forced to close temporarily due to weather damage.

• Claim Handling Process: Research the insurer’s reputation for handling claims efficiently. Look for providers with high acceptance rates and positive customer reviews.

• Premiums and Excess: Balance the cost of premiums with the excess you’ll need to pay in case of a claim. A higher excess might bring your premium down.

Protect Your Premises

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