Property insurers paid out the equivalent of £13 million every day last year to help homeowners and businesses cope with unexpected and unwanted events like flooding and theft, according to figures published today by the Association of British Insurers.
In total, the industry paid out £4.86 billion to homeowners and businesses in 2023. More than half of this figure - £2.55 billion – was for home insurance claims. This is a near 10% increase on 2022 totals (£2.33bn) and has been driven by weather-related damage.
While the total number of claims remained fairly level, the average claim paid to businesses and homeowners rose to £6,235, a 11% increase compared to 2022.1 And when adjusted for inflation, average claim costs have risen while premium prices have fallen in real terms.2
The key trend from the figures is that adverse weather played a huge part in the rise in home claims, with the value of weather-related damage claims reaching £573 million.3 This is the highest on record and 36% greater than 2022 (£421m).
This massive rise was largely fuelled by the succession of storms, including Babet, Ciaran and Debi that struck last autumn. Homeowner’s storms damage claims (high winds and debris) totalled £133m but subsequent flooding added £286m and represents half of all weather-related claims. A further £153m of weather claims came from burst pipes, most of which was incurred in the first three months of 2023 at the tail end of a cold winter.
Weather wasn’t just a problem for homeowners either, with businesses incurring £443m in weather damage claims in 2023 - though fire remains the primary peril to businesses (£880m).
Other trends in the data for total value of home insurance claims settled, include: 4
- Theft claims value up 15% (though still lower than pre-2020 levels).
- Non-weather-related water damage value (e.g. water leaks) up 20%.
- Accidental damage claims value up 11%.
The above is despite a substantially smaller increase in the number of claims for these perils, reflecting the increased cost per claim for insurers to replace goods, make repairs or provide alternative accommodation.
Louise Clark, Policy Adviser at the ABI said:
“Extreme weather events may not feel so rare as they used to as we grapple with a changing climate. Insurers continue to be there for affected homeowners, with payouts hitting record levels after a particularly difficult autumn and winter with seemingly countless storms, from Agnes onwards leading to significant flooding.
“While insurance will continue to protect homeowners and businesses, we can’t afford to lose momentum on our flood defence programme, and we continue to press the government for further investment in flood defence and maintenance, as well as calling for changes to the planning system to discourage building where flooding might be more likely.”
For more information please contact ABI Press Office.
Footnotes
- YoY change excludes newly-reported commercial lines categories for 2023.
- The average cost of a home insurance claim has risen by 16% since 2017, while average premiums have fallen by 13% over the same period (combined buildings and contents, when adjusted for inflation). The year 2017 is the earliest year that we have data for claims paid for domestic property.
- This figure will include claims not yet fully settled.
- NB – these are nominal terms increases, not real terms.