The cost of this summer’s wet weather has yet to be calculated

UK household insurers had a good 2011 – but floods will have an impact

Figures show that 2011 was the fourth consecutive year when UK home insurance premiums either met or exceeded the cost of claims and expenses.

Home insurers in 2011 posted a net combined ratio of 89. In 2007, the most recent year to experience widespread flooding, the net combined ratio was 120.

James Rakow, insurance partner at Deloitte who compiled the figures comments “At an industry level, the size of the home insurance market remains stable with annual premiums worth about £6.5bn. Profitability improved in 2011 because it was a relatively benign year for weather-related losses compared to 2010, when the insurance industry was hit hard by the extremely cold weather that Britain experienced in the December.

“The cost of claims arising from the floods that have swept across the country over the past few weeks will be the greatest since the 2007 flood losses, and will make insurers, reinsurers and other agencies look again at their flood models to check how well they predict the cost of flood claims,” he adds.

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