Claims from festive storms set to maintain pressure on UK non-life insurers: AM Best

Claims stemming from two named storms and widely poor weather conditions in the UK over Christmas and the New Year will maintain pressure on non-life insurers’ profitability, though losses will “likely be manageable” according to AM Best.

Despite this observation, the rating agency said that persistently high claims inflation and recent periods of inadequate pricing will “exacerbate the impact” on bottom lines.

“The latest wave of bad weather comes after Storms Babet, Ciaran and Debi that struck the UK in October and November caused insured losses estimated at more than £560 million by the Association of British Insurers,” AM Best explained.

In early December, Zurich-based catastrophe insurance data provider Perils put European losses from storms Babet and Aline at €509 million with the majority related to flood losses in the UK.

Two further storms in late December and early January (Storms Pia and Henk) have now brought heavy rainfall and high winds across a wider area of the UK than the previous storms, causing extensive damage.

AM Best currently holds a Negative outlook on the UK’s non-life insurance segment, driven in part by the volatility in property lines that exposure to weather-related events brings.

The rating agency noted that property lines generate around one-third of UK non-life premium income.

“Exposure to weather-related risks can generate material losses and volatility in UK property insurers’ results. Significant insured losses would add further pressure to this segment’s profitability,” AM Best concluded.

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