"It's clear that the ongoing impact of climate change will significantly shape how the sector will choose to manage and absorb risks, and our new modeling proves that potential costs could be the deciding factor as to whether a household receives vital cover or not."
- Mohammad Khan, general insurance leader at PwC
According to LV=, most of these claims were caused by a fire in a nearby open area or heathland which spread into homeowners’ gardens. The insurer saw claims for lost garages, fences, greenhouses, sheds and tools, garden furniture, and decking, as well as lost trees, shrubs, and flowers.
READ MORE: Extreme temperatures will see subsidence and fire claims rise warns LV=
Notably, Top Gears’ Jeremy Clarkson confirmed these fire-related concerns, tweeting that he “had to stop harvesting because of, and I’m not making this up, the fire risk.”
The controversial 'petrol head' was among hundreds of farmers in the UK that were forced to halt their harvests last year; this led to some farmers losing thousands of pounds worth of crops. One farmer informed the BBC he lost around £40k worth of crops when one of his fields went up in flames during the July heatwave.
READ MORE: Top Gear’s Jeremy Clarkson confirms LV= concerns amidst harvest halt
According to the latest analysis by PwC, sustained heat, flooding, and heavy rainfall could see insurers witness an influx of subsidence-related claim costs to over £1.9bn by 2030. These findings reflect upon the increasing impact of record temperatures on the insurance market, with a global increase in “unusually hot summers.”
Likewise, the extreme cold weather in 2019/20 reportedly saw economic losses of £333m. PwC believes this figure could rise to £500m by 2050 if flood management and expenditure remain unchanged.
Commenting on these predictions, Mohammad Khan, general insurance leader at PwC UK, has said:
"Our model attempted to put a numerical figure on the impact extreme weather will have on insurance claims. Given the already dry soil and further hosepipe bans, we could see a significant spike in subsidence, which causes the ground beneath a building to sink and potentially pull the foundations down with it.
"We are also seeing other property damage claims related to fires starting in nearby open areas that then spread to homeowners’ gardens and result in fence, garage and decking fires.
Khan continued: “Extreme weather events like this can result in some insurers taking drastic action, such as exploring the risk/cost benefit of giving cover in certain circumstances. This can result in cover for some risks becoming unaffordable or simply unavailable for homeowners in the worst affected areas.
"It's clear that ongoing impact on climate change will significantly shape how the sector will choose to manage and absorb risks, and our new modeling proves that potential costs could be the deciding factor as to whether a household receives vital cover or not.”
