Storms and inflation drive rise in average cost of building insurance claims

The average cost of a building insurance repair rose in Q4 2023 following a series of storms, new figures from Verisk have revealed.

The last quarter of 2023 included six storm events, including Storm Babet, which recorded the wettest day since 1891.

According to data analytics firm Verisk, repairs rose 5.4% during the period compared to Q4 2022 as a result, with ABI figures also showing that £352m was paid out to support customers whose homes were damaged.

Insurers were simultaneously hit by increased customer demand and high inflation last year, which Verisk said increased the cost of materials and labour.

Ben Blain, head of property at Verisk, said: “The inflationary pressures on insurers hit the industry hard in the last quarter of 2023, a time when the UK was experiencing a high volume of claims brought about by the sheer number of severe weather incidents throughout the UK.

“It was a double whammy for the industry to deal with and it comes as no surprise that the widespread property damage during the quarter cost the industry £352m to put right.”

Pressures easing

However, the cost of escape of water claims dropped at the end of 2023, with the price of repairing an average claim down -5.1% in Q4 2023 compared to Q4 2022.

Some materials used in repairing water damaged homes also reduced – for example, the price of chipboard dropped by 14.3% from £18.02 to £15.44 per sheet, while the cost of plywood also came down from £41.84 to £37.22.

“The ongoing easing of macro-economic pressures is a positive sign, with many experts predicting that inflation will fall markedly in 2024,” Blain said.

“Q1 2024 still has some way to play out, but the storm activity in January means the year has not started particularly well for insurers or their customers.

“We are hoping the predictions that inflation will fall markedly are correct, but it remains to be seen to what extent it reduces and at what point in the year.”