The FT had an interesting piece about flooding on 16 December. The surprising thing to me was that about 40-60 per cent of flood-related claims are from damage to properties in areas away from main rivers and involve surface flooding and questions of drainage.

Insurers are hampered in analysing this area as closely as they might like because of a lack of reliable data going back much beyond about 40 years.

The FT piece also comments on the flip side:

>While most of the emphasis when it comes to insurance has been on flooding, severe water shortages also present challenges for insurers. Droughts and heat waves, for example, can lead to an increase in fire-related claims for general insurers.

>Mr Wallace [of RSA] says that while water scarcity is not yet a major issue for insurers, it is beginning to create challenges for other sectors, such as the drinks industry. There could be some implications for insurers if they write policies that protect against companies being unable to trade.

Not sure why the drinks industry is singled out — most likely because they need large quantities of water to make their products, but I guess you could see a rise in claims if people had to turn to beer instead of water. Perhaps.

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