Insurance premiums may rise if insurance firms reappraise the risks affecting the Channel Islands as a result of the bad weather.
But BWCI – the Channel Islands’ largest group of actuaries and consultants – believe that any significant change will tend to emerge over in the mid- to long-term and is more likely to be because of global trends, rather than the current weather. The firm’s actuaries believe that insurance firms will absorb short-term claims made as a result of the wettest January for centuries.
BWCI’s head of insurance services, Ian Morris, said: “At this stage the insurance industry should be able to absorb current claims and large premium increases are not expected. However, continued adverse weather may cause insurers to review their view of the frequency of adverse weather events. They may review their view of the risks affecting the Channel Islands, or particular locations within the Channel Islands.
“I believe that fundamental changes in premium rates in the Channel Islands are more likely to arise from wider considerations such as whether an increase in global temperatures is going to affect future risks, rather than the adverse weather we have at the moment.”
The Channel Islands has been in the path of a steady flow of strong winds and rain with homes and businesses adversely affected and a similar pattern has affected the UK. The Association of British Insurers estimated the cost of adverse weather over Christmas 2013 and new year in the UK to have cost around £426 million, and that figure is likely to escalate.
Mr Morris said: “This large sum might be expected to increase insurance premiums, especially since the £426 million does not include the last month. But in fact at the end of last year, before the adverse weather, claims at the end of 2013 were nearly a quarter down compared with the same nine months in 2012.”
“The costs so far are not as high as in 2007 where flooding in Gloucestershire caused claims of up to £2 billion,” Mr Morris said, “We have yet to see how badly affected the UK is on this occasion.
Actuaries in firms such as BWCI have a key role in helping insurers to assess insurance risks and manage the financial exposures arising.
Category: Finance & Business