Climate crisis helped drive payouts to seven-year high, say insurers | Insurance industry
Britain’s largest insurance firms have warned that the climate crisis has contributed to driving up insurance payouts to the highest level in seven years, after a sharp rise in damage to households and businesses from weather events.
Figures from the Association of British Insurers (ABI) show that the amount paid out in the three months to the end of June hit £1.4bn, a 5% increase on the first quarter of the year and the highest figure of any quarter since it started collecting the data in 2017.
The industry trade body said the increase was largely driven by a leap in weather-related claims, as payouts for damage to UK homes from storms, heavy rain and frozen pipes hit £144m.
It is calling on the government to do more to reduce the country’s vulnerability to the impacts of the climate crisis, after weather-related claims cost the industry more than £100m for a fifth consecutive quarter.
The UK has experienced significant rainfall and bad weather in the first half of the year, which has hit the economy by deterring shoppers from spending on the high street. This includes four named storms since the beginning of January, alongside the wettest spring since 1986.
Extreme weather events around the world have been increasing in severity and regularity in recent years, costing insurers billions of pounds and undermining the resilience of the global economy. Last month, Hurricane Beryl smashed through the Caribbean, devastating entire islands before hitting the southern United States, with a cost to communities and insurers worth billions of dollars.
Louise Clark, policy adviser at the ABI, said the latest UK figures showed the devastating impact extreme weather can have on people and their homes, and called for reforms to the planning regime to focus on prevention and resilience measures to prepare for the impacts of global heating.
She said: “Urgent government action to tackle surface-water flooding and maintain flood investments and maintenance will also help reduce the future impact of flooding.”
Last year, UK insurers paid out a record £573m in weather-related claims, £150m more than in 2022. The average weather-related payout was nearly £5,000 in 2023, compared with a little over £3,000 the year before.
This year, total payouts are on track to exceed last year’s figure of £4.9bn, more than £2.7bn of which has already been paid out. The average annual cost of home insurance also rose to £396, up 6% on the first quarter.
Clark said: “Home insurance continues to play a vital role in supporting customers when the worst happens.
“Despite rising cost pressures, insurers remain committed to doing everything they can to offer competitively priced cover and help their customers during a claim.”
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