LexisNexis Data Reveals 70% of U.K. Insurance Flood Claims Driven by Flash Flooding

As the U.K. experiences another cycle of extreme heat during the summer months, and with sudden thunderstorms and heavy rainfall remaining a seasonal risk, LexisNexis® Risk Solutions, the data, advanced analytics and technology provider to the insurance market, has uncovered a unique picture of home insurance flood claims and flash flooding risk linked to surface water flooding, typically caused by sudden downpours in urban areas.

Using LexisNexis® Precision Claims, the market’s first cross-market insurance claims contributory database, the analysis reveals key insurance claims trends pertaining to surface water flooding and river flooding:

• 70% of U.K. home insurance flood claims relate to surface water flooding caused by intense rainfall and flash flooding.
• 90% of U.K. surface water claims are valued at less than £5,000.
• Fewer than 5% of U.K. surface water claims exceed £25,000.
• Approximately 31% of flood claims occur during the summer months (July-August), broadly in line with winter (32%) and autumn (30%).
• More than 90% of summer flood claims result from surface water flooding, compared with approximately 55% in winter and 75% in autumn.

In contrast, river flooding is much less frequent but much more severe when it does occur, equating to double the severity of surface water flooding. In addition, 30% of flood claims are from rivers breaking their banks, and 12% of these claims are over £25k in value.

The analysis, using LexisNexis® Precision Claims, offers new insight into the insurance sector’s experience with surface water flooding claims vs. river flooding claims. Distinguishing surface water risk from river, or fluvial, flood risk at the individual property level is becoming increasingly critical for insurance premium pricing, underwriting decisions and property flood risk assessment.

“While these statistics are from home claims, they may shed some light onto commercial property risk as well, especially as we head into a softer market. A property exposed primarily to surface water risk presents a very different claims profile to one exposed to river flood risk. Treating these as a single undifferentiated "flood risk" category can create opportunities for mispricing and poor portfolio management at exactly the moment climate volatility is accelerating.” said Caroline Elliott-Grey, senior product manager, U.K. and Ireland insurance, LexisNexis Risk Solutions.

“With a more comprehensive view of the market’s claims experience through LexisNexis® Precision Claims, insurance providers can look at flood scoring and explicitly factor in flood risk type when assessing risk, along with additional factors such as the presence of a basement or the elevation of the property. These insights can help insurance providers make more informed underwriting decisions; price risk more precisely and better manage potential loss severity.” said Caroline Elliott-Grey, senior product manager, U.K. and Ireland insurance, LexisNexis Risk Solutions.