Guy Carpenter & Company, LLC has published “Wrong Type of Rain: Impact and Implications of 2007 UK Floods,” an in-depth analysis on the extensive flooding that caused severe damage in north-eastern England in June 2007 and central and south-western England in July 2007. Over 130,000 insurance claims were submitted, with insured losses estimated at over £3 billion ($6.2 billion).
The report “provides a meteorological summary, detailed event overview and information on insured losses and modeling solutions,” said the bulletin. In addition it “reviews the larger role of the insurance and reinsurance industries and the increasing interest in catastrophe bonds and other Alternative Risk Transfer techniques for managing flood risks. Planned floodplain development in the UK and potential long-term climate change implications are also discussed.”
“The summer of 2007 was the wettest season on record, and parts of the UK experienced their worst flooding in 60 years,” noted Guy Carpenter’s Managing Director Dickie Whitaker. “Flood in the UK is a persistent risk that can potentially cause great levels of damage and disruption. In this case, the damage cost was mostly absorbed by the UK insurance industry, with only a relatively small proportion of the losses ceded to reinsurers.”
According to the report, the impact of the 2007 UK flood losses on reinsurance pricing is not expected to be significant, and additional sideways cover is expected to be purchased to absorb the increased frequency arising from higher retentions. In addition, in order to mitigate the possibility of more severe events in the future, interest in catastrophe bonds and other capital market solutions such as index-linked products is expected to increase.
Whitaker added: “There are more than two million homes currently at risk from coastal or inland flooding in the UK, with plans to build three million new homes by 2020 – including a significant number on known floodplains. Coupled with changing weather patterns and rising property values, this means that the level of flood risk in the UK looks set to increase, highlighting the importance of better managing exposure to flood.”
A full copy of the report is available at www.guycarp.com. Printed copies can be obtained by contacting Guy Carpenter at: email@example.com.
Source: Guy Carpenter: www.guycarp.com
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