Le Lézard
Subject: Economic News/Analysis

Best's Commentary: UK Weather Claims Manageable for Insurers, But Add to Pressure on Earnings

AM Best expects claims stemming from two named storms?Pia and Henk?and generally poor weather conditions in the United Kingdom over the festive period will maintain pressure on non-life insurers' profitability.

The Best's Commentary, "UK Weather Claims Manageable for Insurers, But Add to Pressure on Earnings", notes that AM Best currently has a negative outlook on the U.K. non-life insurance segment, driven in part by the volatility in property lines that exposure to weather-related events brings.

The market tends to produce modest underwriting results in benign catastrophe years and underwriting losses in catastrophe-affected years. The three-year average accident-year combined ratio from 2020 to 2022 sits above 100% and 2023 is expected to produce another 100%-plus result.

The storms in early January were followed by a cold snap that is likely to have exacerbated some damage and delayed repairs, further adding to claims bills. There are also reports that rising water levels have triggered some parametric flood policies in parts of the United Kingdom.

While ultimate losses will likely be manageable for the United Kingdom's insurers, persistently high claims inflation, coupled with recent periods of inadequate pricing will exacerbate the impact on bottom lines.

To access a complimentary copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=339442.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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