Floods to cost insurers billions but households will pay the price
Monday 9th July 2012
Flooding over the last few days could cost the insurance industry £2.5bn.
That was the scale of the loss to the industry five years ago.
At the weekend, the Environment Agency issued flood alerts and flood warnings in areas across the UK, prompting new fears that some home owners will find their properties impossible, or unaffordable, to insure, and making them unmortgageable. By yesterday, even though 169 flood alerts and warnings had been removed within the previous 24 hours, there were still 28 flood warnings and 108 flood alerts in place in England and Wales.
Mohammad Khan, insurance partner at PwC, said: “These events coincide with the five-year anniversary of the floods in June and July 2007 that caused close to £2.5bn losses to the insurance industry.
“At the peak of the floods on June 25, 2007, the EA had 270 alerts of which 15 were severe flood warnings.
“It is too early to say whether 2012 will be similar to 2007, but having so many flood alerts does not bode well.
“This season’s floods also bring into focus the fact that on July 1, 2013, the obligation insurers have to offer flood coverage to properties (Statement of Principles) will expire.
“Given the recent weather, it is likely that the owners of 200,000 properties exposed to flood risk might find it unaffordable to purchase protection.”
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