ABI calls for government action on flooding amid record payouts

The UK government needs to take urgent action, including reform of the planning system, in order to combat the “devastating impact” of adverse weather on homes and businesses in the country, according to the Association of British Insurers (ABI).

The call for action comes on the back of record payouts by insurers between April and June this year, which saw the industry pay out £1.4bn, a 5% increase on the previous quarter when payouts reached £1.3bn and the highest amount since records began in 2017.

The average payout per claim rose to £5,824, a 16% increase compared to the previous quarter.

Adverse weather continued to play a major part in the rising payouts. Claims for damage from storms, heavy rain and frozen pipes reached £81m for businesses and £144m for homeowners, the fifth consecutive time claims have been more than £100m.

There was also an increase in subsidence claims, which reached £60m, the highest quarterly figure on record.

The ABI’s figures also showed a clear relationship between claims and premiums – average home insurance rose by 6% compared to the previous quarter to £396 and 19% compared to Q2 in 2023 for combined buildings-only and contents-only policies.

Yet when adjusted for inflation, the average premium for a combined policy remains around 2.5% below levels seen in 2017.

However, claims were 45% higher in the corresponding time, according to the ABI.

“Our latest figures demonstrate the devastating impact that adverse weather can have on people and their homes,” said Louise Clark, policy adviser at the ABI.

“That’s why it’s important that the government takes the opportunity to reform the planning system, to focus on prevention and resilience measures to help reduce our nation’s vulnerability to the effects of climate change.

“Urgent government action to tackle surface water flooding and maintain flood investments and maintenance will also help reduce the future impact of flooding.”