Floods could cost £2.5 billion – again

This year’s summer flooding marks the fifth anniversary of 2007’s floods, which cost the insurance industry £2.5 billion. With the Environment Agency continuing to issue alerts and warnings across the UK, there are fears that losses could reach a similar amount and leave 200,000 properties – many in prime waterfront areas – uninsurable.

Mohammad Khan, insurance partner at PwC: “These events coincide with the five-year anniversary of the floods in June and July 2007 that caused close to £2.5bn losses to the insurance industry.

“At the peak of the floods on June 25, 2007, the EA had 270 alerts of which 15 were severe flood warnings.

“It is too early to say whether 2012 will be similar to 2007, but having so many flood alerts does not bode well.

“This season’s floods also bring into focus the fact that on July 1, 2013, the obligation insurers have to offer flood coverage  to properties (Statement of Principles) will expire.

“Given the recent weather, it is likely that the owners of 200,000 properties exposed to flood risk might find it unaffordable to purchase protection.”