According to an article in the Insurance Times, the UK insurance news source, a report by AA Insurance shows that insurers are increasing their home insurance premiums in order to increase their reserves to protect against growing weather related insurance claims.
The winter cold spell in the UK caused a large spike in homeowner claims due to cold weather damage such as burst water pipes and flooding caused by melt-water and heavy rains. It seems insurers aren’t prepared to bear the burden of these claims and are seeking to bulk up their reserves to meet future weather related insurance claims costs.
Is raising premiums the answer? Or would the UK’s general insurers be better advised to look at weather risk management and risk transfer techniques which could help them more effectively hedge and reinsure the risks of the less frequent but more severe weather events? It is surely possible to hedge against the temperature drops which cause burst pipework and against the rainfall levels that cause much of the flooding.
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