And further rain is on the way
Moody’s has warned that the Christmas and New Year storms that caused widespread flooding across the UK will have a negative effect on the profitability of insurers.
The credit rating agency said the losses from related claims will “further suppress 2013 profitability” and could add as much as 1.4 percentage points to the industry’s overall combined operating ratio for the year.
The ABI has estimated the cost to the industry at £426m.
However, Moody’s said that the losses were unlikely to have an impact on the falling price of home insurance. According to the AA pricing index, home insurance prices fell by 8.5% over 2013 and Moody’s said it was anticipating a similar fall in rates over 2014.
More rain on the way
The warning comes as the UK braced itself for further storms, with two severe flood warnings in place on Monday morning. Severe warnings, the highest level the Environment Agency (EA) can set, indicate that flooding could present a threat to life.
Winds of up to 80mph are expected this week, with heavy downpours threatening to add more water to areas already subjected to flood waters from the wettest January for 100 years.
The South West and South East are expected to be the worst hit, with the possibility of snow and hail adding to the problems already facing the regions. The EA has so far pumped 2.9 million tonnes of water off the Somerset Levels – the equivalent of three Wembley Stadiums.
EA flood risk manager Paul Mustow said: “Our thoughts are with those who have been affected by flooding. Environment Agency teams are working around the clock to protect homes and communities, and over 87,000 homes were protected over the weekend alone.
“With the Met Office forecasting further heavy rainfall and gales this week, and high tides set to continue, the country should be prepared for further flooding.”