Quick thaw delivered major claims impact from UK cold snap

Insurers are starting to count the costs of the Arctic cold snap which plunged much of the UK into a week of sub-zero temperatures this month (December 2022).

During this spell, the UK suffered its most significant and widespread period of freezing conditions since February 2021, with a level three cold weather alert being issued by the UK Health Security Agency (UKHSA) on 5 December 2022.

However, the bigger issue for insurers is the speed at which temperatures have now increased, adding a new dynamic to the threat of claims around burst pipes.

While homeowners have been quick to report weather-related claims this month, insurers are braced for weeks of new claims as the owners or managers of holiday homes and unoccupied buildings - which are not checked regularly and are often not heated - check for damage.

The insurance industry is, therefore, still looking to get a realistic idea of the number of claims that have been caused by the recent freezing weather - but an uptick is already apparent.

Iwan Williams, head of adjusting services at Crawford and Co, told Insurance Times that the loss adjusting company had been gearing up for a rise in claims for a fortnight.

He said: “We are provided with constant weather updates, so we were aware a week before the temperature fell of the possibility of a lengthy cold snap.

“We put various contingencies in place. The big issue was the speed with which temperatures increased.

“While frozen pipes thaw as the temperature rises, the sudden [temperature] rise added additional pressure to pipes, which added to the risk of bursting.

“We saw three to three and a half times as many claims [as] we would expect to see in an average day in December on 19 December [2022] and the majority of those claims were from domestic properties.”

Pinpointing hot spots

Graeme Fitzpatrick, operations director at loss adjuster Woodgate and Clark, said that his firm has also been knuckling down ahead of expected claims.

He said: “With the prolonged cold spell across the UK, it was expected that there would be a rush of burst pipe claims when the thaw eventually arrived on Sunday 18 December.

“In expectation of this, we activated our surge plan and mobilised our teams in readiness to support our clients and their customers in restoring their businesses and lives. There is never a good time to have a burst pipe, but the lead up to Christmas must be one of the worst.

“In the first few days of this [specific] event, we have seen claim volumes exceed double normal levels overall. At this time of year, normally burst pipes due to freezing would be isolated claims, but [these] incidents have been the single biggest cause of claims [this month] since the thaw.”

One way that Woodgate and Clark is hoping to stay ahead of the claims onslaught is through the use of data science, Fitzpatrick noted. This is because “data from past experiences” can be used to “forecast likely hot spots”, enabling the loss adjuster “to prepare our resources”.

Fitzpatrick continued: “As new claims were being received and recorded, we have been geo mapping the locations in real-time to divert our resources effectively to claim hot spots. This has enabled us to redeploy resources [from] areas which were not impacted and post adjusters in specific locations to action claims as they are being notified to us.

“Claims [so far] have been spread across the UK, however we have identified hot spots in the central belt of Scotland and the north west of England.”

Claims lag

However, it is not just property insurance that has been affected by this month’s cold snap claims.

Gallagher’s claims director for the north, Tina Winterburn, noted that the broker had seen more claims come through around fleets, rather than properties.

She said: “From a property perspective, we are yet to see a major increase [in claims]. We’ve had a few claims, as you would expect - mainly escape of water - but there hasn’t been a major influx.

“Now that the weather is warming up, we are expecting to see some more claims come in as things defrost, but they are yet to materialise in any volume.

“These [types of property claims] have a longer tail on them. For example, if a flat in a residential block suffers burst pipes and then it defrosts and starts leaking [into] other flats, this will take a few days to notify.”

Williams agreed: “We would expect to see a rise in commercial claims in the weeks to come, as unoccupied premises are inspected and buildings which may have seen partial closures due to [a] move to hybrid working [are now] contacting their brokers to make claims.

“We expect to be very busy for a number of weeks into January given the natural time lag for claims reporting.”

Aviva is urging UK residents to prepare for future cold snaps after a surge of enquiries about freeze-related claims following the tail end of the cold snap.

The insurer noted that it experienced call levels around 400% above predicted volumes over the weekend of 17 and 18 December, with many customers reporting frozen and burst pipes.

It said the sub-zero temperatures led to freeze-related claims across the UK, with Edinburgh and Glasgow particularly affected.

With temperatures now beginning to rise and frozen pipes beginning to thaw, Aviva said residents need be vigilant for the signs of water leaks.

Kelly Whittington, property claims director at Aviva, explained: “December is naturally a cooler month, but this year has been particularly cold, with sub-zero temperatures across the country.

“Water expands as it freezes and, unfortunately in the case of water pipes, the pressure can cause them to rupture. People may not even be aware this has happened until the frozen pipes begin to thaw, so we’d encourage people to be on their guard to any signs of water leaks.

“Sadly, the problem seems to have been exacerbated as people try to reduce energy consumption. We have seen a number of cases where people have turned off their heating completely because they were not going to be at home, only to find a burst pipe on their return.

“Our claims teams have been working to help as many customers as possible to put right the homes that have been affected.

“We understand how distressing a water leak can be, particularly at this time of year, so we strongly urge people to take steps now, to minimise the chance of future problems if temperatures suddenly fall again.”

Helped by hybrid working

Williams added that the move to hybrid working has helped to reduce the level of claims, however.

He said: “More people are working from home and, as such, their homes are being heated.

“However, homes where heating has been operating are not immune to burst pipes. If you have an outside tap for the garden, [for example], it can freeze and freeze the pipes into the walls. When the thaw arrives, [this] can create pressure to a level which can burst a pipe.”

Industry commentators feel that overall, the cold weather-related claims levels experienced this month will not mirror those seen in the winter of 2011 to 2012, when freezing weather hit the country during the Christmas and New Year period.

Williams continued: “The timing in 2011 meant there were many families who were not at home as they were visiting relatives and, as such, their homes were not heated. Thankfully, this was not the case this year.”