The struggle continues in the effort to rebuild and repair the damage left in the wake of Storm Desmond that hit the UK at the beginning of December. The repercussions have been devastating caused by what the Met Office has announced as a record for rainfall over a 48-hour period, where 405mm of rain fell in Cumbria and Lancashire. Initial estimates predict that the insurance industry is set to deal with significant losses, the overall damage predicted by PwC to be in the region of £400m-£500m.
Due to the scale of the floods, the short-term focus of insurers has been dedicated to responding to the influx of enquiries into their claims teams, with Allianz immediately experiencing a 300% increase in claims-related calls. Once the initial spike in claims has been processed however, the industry will turn its attention to assessing the long-term implications of these floods.
Dr. Robert Muir-Wood, chief research officer at Risk Management Solutions, stresses the importance of conducting a full post-mortem in order to have "a better understanding of what's happening as it affects not just the insurance industry but government and its spending on flood defences and the public too."
An immediate consequence of the winter's flooding is the Environment Agency's decision to re-evaluate the flood maps across the UK. As detailed below, flood map expert Jill Boulton, expects to see the maps of at-risk areas grow to cater for less predictable occurrences and to provision for the impact of climate change.
Consequently, in order to complete risk analysis and prevent future losses, we can observe the insurers leveraging third party data in order to complete their forecasts. Turning to the information from studies conducted by organisations such as the Met Office and the Environment Agency, enables insurers to more accurately predict the likeliness of severe weather events occurring in particular regions. Therefore, asking the right questions into the available data allows insurers to mitigate risk, and attempt to reduce susceptibility to less predictable occurrences.
The impact of the flooding on insurers has been great. Direct Line has said it expects to pay out up to £140m to claimants after the flooding at the end of the year, £35m more than their annual prediction for weather-related claims. Flood map expert Jill Boulton, a director at Yorkshire-based JBA Risk Management, said she expected the Environment Agency's maps to grow following the extensive flooding over Christmas. “I’m anticipating that more properties will be included, because of global warming and the conditions that we’re seeing."