Stormy times ahead for Insurers

December to February is typically the time of year when the most windstorms occur across the UK. At the beginning of December, Storm Caroline hit the UK causing high winds which mainly affected Western Scotland and Northern Ireland and leading to power cuts to 49,000 homes.  Storm Dylan brought with it strong winds and snow, leading to travel chaos.

Storm Eleanor battered parts of  the UK and Northern Europe at the beginning of January. The Met Office recorded gusts of up to 100 mph in Great Dunn Fell in Cumbria and huge waves of up to 26 feet were recorded in Devon and in Cornwall, a harbour wall was completely destroyed.

The ABI, AIR Worldwide and the Met Office have done some research into the impact of climate change on windstorm events.  The report found that even a small rise in temperatures due to climate change is projected to lead to more insurance losses as a result of high winds.

The analysis indicated that the increased losses are not spread evenly across the country but are likely to be concentrated in Northern Ireland, northern England and the Midlands.   The full report can be found here.

An increase in the frequency and severity of storm events will inevitably place a greater burden on the insurance industry.  Matt Cullen, the ABI’s Head of Strategy commented: “The likelihood of claims resulting from severe storms increasing in the future is something the insurance industry, and society, need to start preparing for now. Planners and builders should be aware of the need for more wind-resistant construction in specific areas of the country if claims are to be kept to a minimum and residents spared the distress and expense of higher levels of wind damage.”

Having a greater understanding of storm risk for a particular location allows insurers to mitigate this risk in their pricing and improve profitability.  Business Insight has built storm models for both residential and commercial properties in the UK which provide a new level of insight into the distribution of storm risk.

The probabilistic models predict which addresses are most likely to experience claims through damaging winds from future storm events.  Based on state-of-the-art mathematical modelling and extensive computing power and combined with over 80 million historic windspeeds recorded in urban areas from across the UK. The analysis of property vulnerability is also taken account of across 26 million homes and 1.7 million postcode locations.

Considering the variation in peak wind gusting across the UK together with factors such as topography, urban density, the local built environment and the likely state of repair of buildings the model can be used to predict annualised loss estimates right down to individual property level.

Benefits for insurers include an unrivalled level of granularity for a deeper understanding of exposure to storm claims in the UK across a book of business and the ability to easily discover areas where rates need modifying to improve storm loss ratios.  It can be supplied in a number of formats and is easily integrated with existing systems.

Contact us for more information on 01926 421408.