The UK insurance industry faced an unprecedented challenge in the second quarter of 2024, with a record-high £1.4 billion paid out in claims, primarily driven by weather-related catastrophes, the Association of British Insurers (ABI) revealed recently. This surge in claims, stemming from natural disasters such as fires, floods, and severe storms, has placed significant strain on both insurers and policyholders.
According to the ABI, the average cost of home insurance premiums rose by 6% from the previous quarter, reaching £396. Moreover, the average premium for combined home and contents insurance policies saw a staggering 19% increase compared to the same period in 2023. This sharp rise is attributed to the growing frequency and severity of weather events, which have caused extensive damage to properties nationwide.
In the second quarter alone, claims for damages to homes reached £144 million, marking the fifth consecutive quarter in which weather-related claims have exceeded £100 million. The persistent threat of flooding, particularly from overflowing rivers and blocked drains, has forced some insurers to reconsider their coverage offerings, especially for commercial properties and residential landlords.
The ABI has called for urgent reforms to the UK’s planning system, emphasising the need for preventive measures to better protect the nation against the increasing impacts of climate change. Louise Clark, Policy Adviser at the ABI, stated, “Urgent government action to tackle surface water flooding and maintain flood investments and maintenance will also help reduce the future impact of flooding.”
The recent flash floods in London following torrential summer rain and the devastating effects of Tropical Storm Debby in the southeastern United States underscore the growing risks posed by climate change and urbanisation. These events serve as a stark reminder to insurers and policymakers alike of the need for robust strategies to mitigate the effects of extreme weather.
The ABI also reported that the total insurer payout for the second quarter of 2024 was 5% higher than in the first quarter, reflecting the escalating financial toll of weather-related disasters. As temperatures continue to rise, with Britain experiencing its highest temperature of the year at 34.8°C in Cambridge, the pressure on the insurance industry is expected to intensify.
In anticipation of further heatwaves, the UK government has issued warnings about the potential impact on vulnerable populations and the strain on health and social care services directly impacting the insurance and healthcare sector.
