U.K. insurers may face claims totaling as much as 1.5 billion pounds ($2.2 billion) from businesses and homeowners for damage caused by two storms this month, according to consultant KPMG LLP.
Heavy rain and flooding is estimated to have caused a loss to the economy of 5.8 billion pounds, the London-based consulting company said in a statement Tuesday. Storm Eva and Storm Desmond have damaged homes and disrupted business activities across northern England, Wales, Scotland and Ireland.
“In 2007, when a similar pattern of flooding hit, total insured claims were 3.2 billion pounds. However, we consider that the actual financial impact far exceeded this,” Justin Balcombe, KPMG’s U.K. head of general insurance management consulting, said in the statement. “We are assessing this month’s events through a number of economic lenses, resulting in an initial total cost estimate of 5 billion pounds to 5.8 billion pounds.”
PricewaterhouseCoopers LLP estimated economic losses of as much as 1.3 billion pounds, with the insurance industry bearing up to 1 billion, according to a Dec. 27 report published on the consultant’s website.
“If rain continues to fall in large quantities, and the areas with warnings in place do indeed flood significantly, it could well be that the total economic losses could breach 1.5 billion pounds with an additional significant increase in insurer losses from our initial estimate,” Mohammad Khan, general insurance leader at PwC, said in the report.
Storm Frank is due to hit the west of the U.K. from Tuesday evening with strong winds and heavy rain, the Daily Telegraph reported. Widespread gusts of up to 65 m.p.h. are expected, with exposed areas — particularly in northwest Scotland and later Shetland –likely to endure fierce gales up to 80 m.p.h., the paper said.