Allianz owned LV General Insurance warns of climate impacts on residential underwriting in the UK
UK insurer LV=General Insurance (LV=GI) – bought by Allianz in 2019 – has warned that UK fire and subsidence claims will rise this year due to extreme heat.
LV=GI said it was dealing with claims worth £1.2 million after the heatwave of 17 to 20 July, according to a The Guardian article. The firm noted that most of the cases related to fires starting in nearby open areas or heathland that spread to homeowners’ gardens.
According to the article, 8% of those cases involved the total loss of a home.
Additionally, LV=GI also predicts a spike in subsidence, mainly due to already-dry soil and the prospect of further hosepipe bans, which could cause the ground beneath a building to sink and pull the foundations down with it.
Subsidence cases between June and July have increased 205%, according LV=GI. It added that extreme heat in August could result in a similar spike in claims to 2018, when they rose 51% due to exceptionally hot weather.
LV=GI analysis also showed that homes across southern and central England have higher probabilities of sinking because of unstable soil due to low rainfall in the area; the analysis noted that rainfall was already lower than in 2018.
Sarah Smith, head of home underwriting at LV=GI, said to The Guardian: “We’re really starting to see the effects of climate change and the impact this is having on homes – whether that be storm, flood, fire or subsidence claims – which have all risen in recent years depending on the season.
She added: “As a country, we’re going to need to adapt and ensure existing houses are better protected, as well as really consider the locations planned for new houses which may be in areas more prone to events such as fires starting and spreading rapidly.”
Extreme heat has also been affecting other countries across Europe. Most recently, about 10,000 people have been evacuated in the Gironde region of south-west France after a massive blaze that destroyed more than 15,000 hectares (37,000 acres) of pine forest in July sparked up again and tore through woodland.
According to the authorities, a record-breaking drought and high temperatures in the area contributed to the fire to reignite. These two issues have led to multiple wildfires over the past two months.
Source: Reinsurance News, https://www.reinsurancene.ws/lvgi-warns-over-the-impact-of-record-temperatures-on-claims/