But insurers are ‘on the edge of their seats’ as bad weather continues

Storm and flood claims to date have not been enough to push up property rates, according to Zurich general insurance chief executive Steve Lewis.

However, he added that insurers were ‘on the edge of their seats’ waiting to see if the current bout of bad weather will continue.

Speaking to Insurance Times following the release of his company’s full-year results, Lewis said: “On the property side, while this clearly for certain areas of the country looks like absolute devastation, it is nowhere near as material event as the 2007 flooding and nowhere near the size of the cumulative impact of the events in 2012.

“While I would clearly like to see some additional pricing in the property space in personal lines, I am not sure today whether the losses are adequate to move the dial.”

Lewis declined to give a figure for Zurich’s UK flood losses to date, but said the insurer’s bill was commensurate with its market share.

The ABI estimates that the flooding between 23 December 2013 and 8 January 2014 cost the industry £426m.

Zurich has a 3% share of the UK general insurance market as a whole, according to ABI figures, suggesting a claims bill of about £12.8m.

The losses were not enough to dent Zurich UK’s 2013 results. The insurer reported a four-point improvement in its 2013 combined operating ratio to 95.8% from 99.8% in 2012, mainly because of lower weather losses.

Edge of seats

While the losses may not be enough to move rates and hurt underwriting profit, Lewis noted that the bad weather has yet to abate and the situation is developing.

He said: “We are all sat there on the edge of our seats in the context of whether this weather continues.”

Work bearing fruit

In addition to lower weather losses, Lewis said the improved result was down to underwriting discipline.

Gross written premium was flat for 2013 at £1.68bn, as a fall in personal lines premium offset growth in selected areas of Zurich’s UK commercial book.

Lewis said: “Overall, I’m pretty comfortable with the shape of the portfolio and the discipline we have maintained across all of our portfolios. That ultimately has enabled us to deliver a pretty healthy set of results.”