Until December, 2015 was on track to be the eighth consecutive year that personal home insurance delivered profits, with the industry expected to report the best net combined ratio since 2011. Deloitte, the business advisory firm, estimates that insurers’ 2015 reported net combined ratio will now be 108%, a 16 percentage point deterioration from 2014 (92%) due to the intense period of wet weather in December.
Some uncertainty remains around this estimate as it is still early days in the process of assessing and settling last months’ flood claims. However, with £100m of weather costs equating to a two percentage point increase to the net combined ratio, it is clear that at the very least, 2015 will deliver a loss for the industry.
James Rakow, insurance partner at Deloitte, said: "Although the scale of the claims costs from December's floods are similar to those seen two years ago the timing is very different. The 2013/2014 winter claims were spread across two financial years and in spite of the £650m claims cost the home insurance industry reported profits in both 2013 and 2014. There are still two months of winter weather to come and further flood warnings have been issued just this week. If January and February see significant flood and storm events this winter could be the most costly for the home insurance industry since the winter of the Burns' Day Storm in 1990."