C-Suite - Insurer: Weathering the storm

I was very interested in recent figures released by the Association of British Insurers that showed weather claims caused by flood damage totalled £13m in the first half of 2015 – the lowest amount since the first half of 2006.

The £60m of storm damage claims recorded in the first six months of this year told a similarly positive story as the average figure going back to 2006 was £148m.

Insurers’ first half balance sheets will have reaped the benefits of such an unexpectedly calm period of weather and, of course, it would be extremely helpful if we could enjoy the same level of good fortune over the next few years.

However, good fortune is exactly what it is, so I was pleased the ABI also drew attention to the unpredictable nature of the weather in the UK and the need to focus on the long term.

Indeed, October provides an excellent reminder of just how savagely unpredictable the UK’s weather can be – and also how expensive.

For example, the Great Storm of 1987 hit the UK on 15 and 16 October with the strongest gust of wind recorded at 120mph.

The storm resulted in the felling of 15 million trees, causing widespread damage to homes, businesses and vehicles. Insurers’ claims teams were under intense pressure from handling the sheer volume of customers reporting damage to their property.

The final cost to the insurance industry of that storm was £1.2bn – the equivalent of more than £3bn if the storm was to happen today.

Another example of a devastating October storm was the 2013 windstorm that hit northwestern Europe on 27 and 28 October. In the UK, the strongest gust of wind was recorded at 99mph and there were a number of serious incidents including a crane collapsing on top of the Cabinet Office. I remember this particularly well as Allianz insured the crane.

Looking back at these two well-documented events is useful because they pose some very interesting questions for insurers. For example, if a major weather incident was to happen tomorrow, would the level of service we provide fall short or would it delight our customers? What would happen to the premiums we charge our customers following such an event? Do the rates currently available in the household market make adequate allowance for the weather?

I hope that when the next severe weather event comes along – and we know it will – that history will confirm the industry performed well against these criteria.

Jon Dye
CEO, Allianz UK