United Kingdom

Details

  • Industry: Financial Services, Insurance
  • Type: Press release
  • Date: 12/02/2014

KPMG warns of two to three year financial impact of recent floods 

 

In reaction to the recent floods across areas of the UK, Justin Balcombe, UK head of general insurance consulting at KPMG warns of the long-term cost of flooding to businesses, homeowners and the economy and discusses the implications for businesses, government as well as insurers. 

 

Justin Balcombe said: “Due to the scale of the recent floods, we predict that the economic impact may be felt for at least two to three years due to the volume of water, sewage, agriculture and infrastructure damage. This in turn means that conventional business interruption and homeowner insurance cover may not be adequate to provide financial compensation to flood victims and businesses. The significant amount of under insurance will place additional financial pressure on people who simply can't afford to fund any gap.

 

“As assets and infrastructure need to be rebuilt, the challenge for local authorities and government will be to develop an economic risk and compensation model which not only considers the immediate remediation, but also addresses the long-term cost of recovery and any shortfalls including further sustainable preventative measures."

 

“The insurance industry is well equipped to handle large-scale events such as flooding. However whilst there will be a number of large claims due to the floods, there will also be an unprecedented volume of low value claims, which will undoubtedly stretch the resources of the insurers. 

 

“This will be a challenging test for insurers in terms of claims handling processes and procedures as well as presenting an opportunity for the industry to innovate and refine their claims processes for any further events.

 

“In the long-term, we will see further innovation from the insurance industry in response to the floods, such as the recent introduction of the not-for-profit scheme Flood Re, being developed by both the Association of British Insurers and the Government. This will ensure flood insurance remains affordable, even for those in high risk areas.”

 

                                                                Ends

 

Notes to editors:

 

 

For further information please contact

 

Simon Chan, PR Assistant Manager, KPMG

Tel: +44 (0)20 7694 2024

Mobile: +44 (0) 7747 564 737

Email: simon.chan2@kpmg.co.uk

 

KPMG Press Office: 020 7694 8773

 

About KPMG

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with approximately 11,500 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2013. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 155,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

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