U.K. Awash in Summer Flood Losses

A devastating summer punctuated by massive flooding in the U.K. could leave insurers with more than $6.5 billion in claim losses. The estimates, which are more than the losses sustained from 2005′s Hurricane Rita , were provided by Risk Management Solutions (RMS), a provider of catastrophe risk services.

The claims stem from two major flood events: one in June that is expected to cause between $2 billion and $3 billion in losses, and another just weeks ago that could have losses topping $3.5 billion. The huge losses could wreak havoc on insurers, RMS says, because almost 70 percent of the areas impacted by the July floods were in areas located off the major river floodplains. “Many insurers assess their flood risk exposure based on maps that only take account of river and coastal flooding,” said Dr. Claire Souch, senior director of model management at RMS, in a release issued by the company. “The recent events highlight that these incomplete maps only provide part of the picture, and that flooding due to heavy rainfall in areas with inadequate drainage or from minor streams can have dire consequences. Those insurers that have only taken account of their risk exposure from direct river flooding could face an unexpected deluge of claims.”