UK flooding – PwC estimates insurance losses from Storms Eva and Desmond

Published at 10:45 AM on 27 December 2015

Mohammad Khan, general insurance leader at PwC, comments:

"After Saturday’s torrential rain, and with rare "danger to life" warnings issued, the economic damage to the UK could be significant. It is still early to estimate losses but, based on the areas where significant rain has fallen, the great number of roads submerged and including the losses arising from Storm Desmond earlier this month, we would give a very initial estimate of economic losses of between £900m and £1.3bn, with the insurance industry bearing between £700m to £1bn of this. Unfortunately many areas that were affected during Storm Desmond have been flooded again.

"If rain continues to fall in large quantities, and the areas with warnings in place do indeed flood significantly, it could well be that the total economic losses could breach £1.5bn with an additional significant increase in insurer losses from our initial estimate.

"The insurance losses that arose from the flooding and storm damage during Storm Desmond were severe but were within nearly all affected insurers' large loss expectations for 2015, as 2015 was such a benign year prior to the December weather. The additional damage from Storm Eva and any further damage caused by additional rain will impact relevant insurers' year-end profitability. It is too early to say whether it causes the 2015 profitability of the household and commercial property business they write to be loss-making."

Domenico Del Re, head of catastrophe management at PwC, comments:

"Recent additional flooding once again highlights a need to recognise that the introduction of Flood Re and the rebuilding of flood defences will not automatically solve the affordability of flood insurance, nor will it stop flooding when severe rain falls. Following the 2007 floods, a lot of work was undertaken on flood defences but clearly more can be done. Flood defences cannot stop everything, as they are based on historical information, but a lot more information exists today than there was even five years ago. Businesses (which are not covered by Flood Re) need to make use of all the flood data that is out there to make themselves more resilient when a flood occurs."

Ends                                 

Notes to editors

Please contact Ellie Raven on ellie.raven@uk.pwc.com or +44 (0) 7525 925 830

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

©2015 PwC. All rights reserved


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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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