The insurance bill for the floods and storms that besieged Britain over the winter has hit £800 million - and with 1,500 households still exiled from their homes, the total cost will keep growing for some months to come, the industry association has revealed.
Households have lodged 18,000 flood claims totalling more than £400 million and a further £400 million worth of storm-damage claims since 23 December, the Association of British Insurers said.
Most of these claims have yet to be paid, but the association said it had made £20 million of emergency payments – to cover clothing, toothpaste and other essentials for families displaced from their homes – and spent a further £20 million and £30 million to accommodate people driven from their houses.
Aidan Kerr, ABI’s head of property, said it would be some time before the true insurance cost of the severe weather were known, since 1,500 of the 2,000 households that have been forced into temporary accommodation continue to live away from their homes.
Mr Kerr said the large number of people still in temporary accommodation – in some cases after more than two months – underlines the extent of the problem, saying it would take “many months” before every family will be back at home.
It also emerged that insurance companies want to invest in Britain’s flood defence system – but are wrestling with how to make it work financially.
Speaking at a meeting of the Environment, Food and Rural Affairs parliamentary committee, Mr Kerr said that insurers were keen to invest in flood defences “but there has always been the issue of getting a return on that investment”.
Every £1 spent on flood defences is said to create £8 worth of “cost benefits”, reducing damage to property and disruption to business, Mr Kerr said. But it is extremely difficult for investors to “monetise” this cash flow as the benefits tend to flow elsewhere, he said.
Insurance companies are looking at ways to channel money into flood defences in a way that rewards investors better – potentially through putting some kind of levy on those that benefit, through a reduced risk of flooding and, potentially, lower premiums, Mr Kerr said.
“We are concerned about the amount of money going into [flood] maintenance spending,” he said.
Some 6,500 loss adjustors have visited flooded homes, with a further 500 visits yet to come – “because it’s taking so long for the water to go down”, he said.Reuse content