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Member, Beacon International Group, Ltd.
LONDON--As rain continued to pour down on much of the United Kingdom, catastrophe modeling firm Risk Management Solutions Inc. forecast that insured losses from this week's floods could exceed £500 million ($999.6 million).
The modeling firm said the flooding already appears to be worse than the 1998 floods, which damaged around 3,000 properties and resulted in £190 million ($379.8 million) in today's value of insured loss.
RMS also said, however, that at this stage the event is not as severe as the autumn 2000 floods, which affected more than 10,000 properties and caused £925 million ($1.85 billion) in insured damage in today's value. However, the floods are ongoing, and further rainfall is expected over the weekend.
The Northern city of Sheffield in Yorkshire is one of the hardest-hit areas, mainly because the River Don burst its banks.
RMS said flooding has been reported in some of the major industrial and commercial riverside locations and has caused "substantial" business interruption losses. "Two factors that will benefit insurers are that property prices tend to be lower in the north of England compared to the south, and buildings dry out quicker in the summer," said Claire Souch, senior director of model management at RMS.
RMS said the rainfall problem has been caused by a stationary east coast depression, which draws moisture from the North Sea. The modeling agency noted that the event has been described as a "one in a 100 year event" and that historical records indicate that this was the first time that the River Don has burst its banks with such dramatic consequences for 150 years.
RMS added that the extent of further insured losses will depend on whether the rain expected over the coming weekend falls directly over the areas already hit.