A life raft amid the flood chaos?

The industry came back to work today after a washout weekend to face even more claims coming from UK floods.

Flood claims from heavy rainfall started to come in from April, and the ABI estimates that the cost of these claims will run into the hundreds of millions of pounds already.

The big questions are – how long is this going to go on for, and how much will the final bill be?

On the first point, it seems there is no end in sight. Forecasters expect the wet weather to continue until at least the end of July, and possibly even further.

Working out the cost is also uncertain, and there is no end in sight here either. It is still raining and claims are still coming in. Plus, flood claims often take a long time to settle once factors such as drying time and rebuilding are included, so the bill is still growing.

However, an ABI spokesman was optimistic that the cost of this year’s flooding will not come close to the £2bn figure insurers forked out in 2007, when flash floods hit homes across the country.

Cause for optimism

Leaving aside the freakishly large claims of 2007, the UK’s flooding problem seems to be growing, both in terms of cost and frequency of major events.

With this in mind, the industry is looking to the government to draw up a replacement for the Statement of Principles on flood insurance. Planning a replacement has been a slow process, and it is still being discussed behind closed doors by bodies including the ABI, Treasury and the Department for Environment, Food and Rural Affairs.

However, recent rumours suggest that the talks are going well and that an announcement is likely to come either before the House of Commons recess starts on 17 July, or after 3 September when the recess ends.

This optimism will give the insurance industry a much-needed boost amid so much flood chaos.