CGNU makes £200m storm-claims provision

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The Independent Online

CGNU has become the first major insurer to reveal what the cost of the recent storms may be, saying yesterday that it has made provision for £200m of potential claims.

CGNU has become the first major insurer to reveal what the cost of the recent storms may be, saying yesterday that it has made provision for £200m of potential claims.

The company said the total cost of the claims could be "far higher" than £200m. Claims above £200m would be covered by its existing catastrophe reinsurance. However, at the moment the final cost of the wind and flood damage is unknown. Richard Harvey, deputy chief executive of CGNU, said: "We have had 30,000 claims as of Tuesday and probably a lot of people have not had a chance to get in touch so far. But we have no way of inspecting the damage yet."

CGNU predicted that a clearer idea of the cost would be known in one to two months. If the sum did reach £200m, it would be the same level of pay-out as in the 1987 hurricane and the 1990 storms.

Mr Harvey warned that some people who live in areas that are particularly vulnerable to floods may not be able to buy insurance cover in the future. He said: "It is a two-way street. We would take a very positive view of areas where remedial action has been taken. But where absolutely no action is taken, some properties will be increasingly difficult to cover."

The comments came as CGNU, the UK's largest insurance company since the merger of CGU and Norwich Union in May, reported a strong increase in its long-term savings business.

New long-term savings business world-wide was up14 per cent to £9bn for the nine months to 30 September, with operating profit from life business rising 24 per cent to £1.1bn.Overall the company reported a post-tax loss of £959m, following the one-off cost of its sale of its Lloyd's commercial insurance business last week. CGNU shares fell 15p to 1013p.

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