Insurance companies face strain from series of large U.K. storms

UK Flood homeowners Insurance companies Flood Re Plan

The costs associated with Storms Desmond, Eva and Frank has insurers starting to feel some pressure.

Britain has faced one damaging storm after the next, as Storms Desmond, Eva and Frank brought flooding and winds that left catastrophes behind and that now have insurance companies feeling the pinch from the associated costs.

In fact, many of the insurers that are now counting up the total cost are some of the largest in the country.

Victims of the flooding have now started to submit their claims to their insurance companies and those insurers are starting to feel the pressure from the climbing costs they will be facing, says newly released research. Moreover, there remain dozens of different flood warnings in place as a result of the impact of Storm Frank. Over the last few months, rainfall levels have broken records and it looks as though this won’t be the last of the water that will be added to some regions.

Analysts from Bernstein have said that insurance companies could face about £1.5 billion in damage costs.

UK Flood homeowners Insurance companies Flood Re PlanThat estimate was for all the storms leading up to Storm Frank, but doesn’t yet include what is coming from that most recent event. It remains too early to know exactly how much Frank will have added to that total. The insurers most likely to have to face the majority of those costs include Aviva, RSA and Direct Line.

In the case of RSA alone, the losses that have been seen from the storms across the United Kingdom may be anywhere within the range of £35 million to £120 million. That is the total after having taken into account that the insurer will receive some payments from its reinsurance policies, in order to soften the blow.

Should the worst case occur and the insurer need to face expenses from the highest end of that range, it would mean that it would have to make payments representing about 3 percent of the overall value of the entire company, according to analysts. Industry analysts are recommending that “investors should brace for a more modest dividend for this period,” from insurance companies.

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