12th Jan 2016 07:40
LONDON (Alliance News) - Direct Line Insurance Group PLC was on Tuesday counting the cost of insurance claims in the wake of three storms and severe flooding in parts of the UK over December, with the costs to it to range between GBP110.0 million and GBP140.0 million.
The motor and home insurer said the actual losses it incurs from storms Desmond, Eva and Frank will not be known with certainty for some while, meaning that the figure could rise.
The floods in areas of the country such as Cumbria, Yorkshire and southern Scotland caused big disruption and forced people to be placed in alternative accommodation due to damage to their homes, and prompted an emergency response from insurers.
Direct Line said claims are expected to be incurred in both its home and commercial division.
"Home claims from the three storms are estimated in the range of GBP80 million to GBP100 million and this compares to a normal annual level of claims from major weather events of approximately GBP80 million. Prior to these storms no claims from major weather events had been incurred during 2015. Claims will be incurred across both own brands and partners and due to profit share arrangements the group expects a proportion to be offset through reduced profit share being payable to partners," Direct Line said.
"Claims in the commercial division from the three storms are estimated in the range of GBP30 million to GBP40 million. Taken together, commercial weather-related claims and other large claims during 2015 are estimated to be approximately GBP15 million to GBP25 million more than expected in an average year," the insurer added.
Moreover, Direct Line said it does not expect to make any recovery under its property catastrophe reinsurance contract, as its "per event retention" is GBP150.0 million.
The group reiterated its 2015 target of achieving a combined operating ratio of 92% to 94% normalised for claims from major weather events.
By Samuel Agini; [email protected]; @samuelagini
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