Britain’s largest insurance firms have reported a dramatic rise in payouts, reaching their highest level in seven years, largely driven by the intensifying climate crisis.
The Association of British Insurers (ABI) revealed that in the three months leading up to the end of June, insurance claims soared to £1.4 billion. This marks a 5% increase from the previous quarter and is the highest quarterly figure since ABI began tracking this data in 2017.
The surge in payouts reflects the growing impact of severe weather events on households and businesses across the UK. Damage from storms, heavy rain, and frozen pipes alone accounted for £144 million in claims.
The ABI is urging the government to enhance efforts to mitigate the effects of climate change, emphasizing the need for better flood prevention and infrastructure resilience.
The first half of this year has seen unprecedented weather conditions, including four named storms and the wettest spring since 1986. These extreme conditions have not only increased insurance claims but also impacted the economy by discouraging consumer spending.
Climate crisis drives up insurance claims, stressing the need for improved flood resilience.Globally, the trend of escalating weather-related damages continues, with events like Hurricane Beryl causing substantial destruction across the Caribbean and the southern United States.
Louise Clark, policy adviser at the ABI, highlighted the urgent need for government action to address these challenges. “The latest figures underscore the severe consequences of extreme weather on our communities,” she said.
“Reforms to the planning regime and investments in flood management are crucial to enhancing our resilience against future climate impacts.”
The financial strain on insurers is evident, with weather-related claims for the past year alone totaling a record £573 million—£150 million more than in 2022. This increase has pushed the average weather-related payout to nearly £5,000, up from just over £3,000 the previous year.
With payouts projected to surpass last year’s total of £4.9 billion, and with £2.7 billion already disbursed, the cost of home insurance has also risen, reaching an average of £396—a 6% increase from earlier this year.
Despite these pressures, insurers remain committed to providing support and maintaining competitive coverage for their customers.
As the climate crisis continues to escalate, both the insurance industry and policymakers face mounting challenges in safeguarding communities and managing the financial repercussions of extreme weather.