The ABI calls for more funding to protect properties after record claims for weather-related damage

The ABI have called for greater property protection after publishing data which revealed that insurers paid out a record £585 million in claims for weather-related damage to homes and possessions in 2024.

The record claims follow significant and consistent bad weather, including 12 named storms across the 2023/2024 storm season- the highest frequency of named storms since 2015/2016 according to Met Office statistics.

Record high claims for weather-related property damage

Claims for damage caused to home by windstorms, flooding and frozen pipes in 2024 surpassed the 2022 record for the same claim types by £77 million to reach £127 million- 28% higher than the weather-related claims pay-outs for 2023.  

Total property claims on commercial and domestic property policies in the fourth quarter of 2024 were £1.6 billion, bringing the annual claims total to £5.7 billion – the largest amount paid out in any year on record.  

The latest claims data from the ABI also revealed:

• Claims for damage to homes from adverse weather reached £146 million for the final quarter of the year– making it the seventh consecutive quarter that weather-related claims have reached above £100 million. The quarterly claims figure was also £17 million more compared to claims paid for the same type of damage in Q4 2023.
• Insurers paid out £102 million to businesses for weather-related damage and business interruption during the final quarter of the year, signalling that it is not just homeowners affected by adverse weather. This is an increase of 7% on the previous quarter, and 16% on Q4 2023. 

Mark Shepherd, Head of General Insurance Policy at the ABI, commented that the latest data “serves as a blunt reminder of the devastating damage that adverse weather can cause to people’s homes and businesses”, but emphasised that, whilst insurers are prepared for such events at any time “prevention is always better than cure.”

“That’s why we continue to advocate for climate resilience measures to be carefully considered in all planning decisions and building standards, to ensure properties are fit for the future and that they are not built in areas prone to climate risk. We’ve also long stressed the need for Government to further invest in flood defence and maintenance, and to take swift action on mitigating surface water flooding.” 

Funding key to manage flood risk

Citing research from Fathom that was commissioned by Flood Re, the ABI notes that flood defences can save households alone £1.15 billion by mitigating damage each year. Previously commissioned research published in 2021 by the ABI, Flood Re and flood specialist JBA revealed that for every £1 spent on flood defence maintenance, £7 is saved in capital spend.

The ABI have subsequently called for essential funding to boost flood risk management; in its submission to the Spending Review, the trade body urged the Government to ensure adequate annual investment is allocated to flood defence maintenance projects as part of the new funding formula.

Chris Rumsey, head of Public Affairs at the ABI commented: “[w]hile we welcome the government’s recent uplifted investment in flood defences, we want it to commit to an annual investment of at least £1 billion a year from 2026 onwards”

“This crucial investment is needed to help protect people’s homes and businesses, and to ensure that the UK keeps pace with adapting to our changing climate,” he added.

High claims costs impacting premiums

The ABI also highlighted the impact of high claims costs on premiums. In 2024, the average annual price of combined building and contents home insurance increased by £55 (16%) to £395, compared to 2023. 

Furthermore, the latest quarterly premium data from the ABI revealed the average price of a combined household buildings and contents policy in Q4 2024 was £403 - £4 (1%) lower than the previous quarter but £39 (11%) higher than the same period in 2023.   

ABI also produced inflation-adjusted data to indicate what historic costs would have been if subject to the same inflationary pressures as today, highlighting real growth or decline. When adjusted for inflation, the average combined household buildings and contents premiums are below levels observed between Q1 2013 to Q4 2017, where inflation adjusted premiums were consistently above £405.Meanwhile, the equivalent average claim paid is 51% more expensive than in Q4 2017.