Risk Management Solutions modeling firm said it estimates the United Kingdom's floods in late June cost over $1.5 billion in insured losses, and that the current flooding will be at least as costly.
More than a million people have been affected this month by the worst flooding in the U.K. in 60 years.
While it seems the number of affected properties is less than June's flood, total costs could run higher in the current flooding, RMS said.
A combination of factors such as higher average claims and proportion of damage which is insured, together with business interruption caused by loss of power and running water, will make this round more costly and take the total insured loss for late June and July to over $4 billion, RMS projected.
Although the situation is ongoing and more flooding could occur, RMS said it is highly unlikely that the total damage so far this summer will be as great as from the 1947 flooding, which affected nearly all the main rivers in the south, midlands and northeast of England. Those floods are estimated to have cost $12 billion in today's dollars.
But while the current floods are not as extensive, they will pose the biggest test to the private flood insurance market–as flood cover was not widely available until the 1960s. And it also may lead to a serious reconsideration of the availability of flood insurance, according to RMS.
"Premiums charged by insurers do not fully reflect the flood risk to which properties are exposed," commented Robert Muir-Wood, chief research officer at RMS. "This summer's floods have exposed many shortcomings in flood risk management and the location of critical infrastructure like power stations and water treatment plants, which have been shown to be vulnerable."
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