Floods devastate Cumbria

Figures from the aftermath of November's floods in Cumbria make for grim reading. More than 1,500 homes are flooded and 1,000 claims have already been submitted. Sadly, three people died, among them PC Bill Barker, who fell from a collapsed bridge into the River Derwent.

Showing the unprecedented nature of the event, the Environment Agency measured rainfall of 314mm (12.4 inches) in a day in Seathwaite, Cumbria, far in excess of the previous high mark of 279mm, recorded in Dorset in 1955.

The town of Cockermouth was the worst hit, with large sections of the town cut off. A short walk of 400 yards there became an 80-mile round trip. Other towns heavily affected included Loweswater, Brigham, Buttermere and Braithwaite. Prime Minister Gordon Brown visited the area and pledged £1m of emergency government funding.

Many industry figures considered the floods to be a one-in-200 year event - most flood protection is designed to cope with one-in-100 year events.

According to George Bentley, UK client services director at loss adjuster GAB Robins, average domestic claims will cost £57,000 - including buildings, contents and temporary accommodation - while commercial and business interruption clams will reside in the region of £100,000. Four claims were for over £1m and GAB Robins is warning of a rise in building rates of 40% in Carlisle and 20% in Hull. Contractors will have expensive travel and accommodation costs.

John Bell, head of claims at Aon Corporate, commented: "The floods and severe weather in Cumbria have had an equally devastating impact on homes and businesses alike. In addition to the extensive flood damage, properties inundated with water are unlikely to be dried out before Christmas, so families face the prospect of the festive season in a hotel, a bed and breakfast or a caravan in the garden."

Calculating losses

He continued: "From a business perspective, these events could be very damaging because trading may not be possible during the festive season, when many businesses enjoy the bulk of their trading. The danger is that insurers may not take the increased revenue trend into account when looking at business interruption claims - they might try to apply a flat turnover based on previous months."

The insurance industry must now be careful not to alienate flood victims with high excesses as house prices drop and people become less attracted to living in the area. There are also calls for insurers to help replace buildings and fixtures to become better suited to flooding by, for example, introducing higher-mounted electricity wall sockets.

Andrew Brown, technical claims manager at Ecclesiastical Insurance - which has been hit by significant business interruption and property damage claims for holiday homes in the area - said: "Recent localised flood events have highlighted the potential benefits of resilient reinstatement. As an industry, we have to consider flood-resistant repairs.

"Customers caught up in one-in-200 year events will struggle to see the benefits of paying for the additional costs, so we must carefully promote these initiatives only at those customers most at risk on a cost-benefit basis."

Brown is also concerned about the wider costs of water damage to buildings. He said: "Property insurers are alarmed by the rising cost of repairing water damage, in part due to modern building methods. The use of timber framing, insulated wall panels and dry lining are all examples of the very opposite of resilient because they perform particularly badly in floods. Tackling this issue at construction-industry level, especially where development is planned within a flood risk area, must remain a top priority."

Climate change?

Although hard to prove, some have argued that climate change has contributed to the rains in Cumbria and called for more action at the impending climate change talks in Copenhagen in December. In a report issued jointly with the World Wildlife Fund for Nature, Clemens von Weichs, head of Allianz¹s reinsurance unit, upped the rhetoric: "Changes related to global warming are likely to be much more abrupt and unpredictable; they could create huge social and environmental problems and cost the world hundreds of billions of dollars." According to the Insurance Information Institute, weather-related natural disasters cost insurers an average of $33.1bn a year between 1999 and 2008. Hopes have risen for a deal in Copenhagen as US President Barack Obama said that he will attend the talks with a plan to cut emissions in the US by 42% by 2030.