Lockdown reins in 'Beast from the East Two' claims hit

Snow on cars

At the beginning of February, national headlines warned of a ‘Beast from the East Two’ as snowy blizzards, heavy rain and gale-force winds were forecast to batter large parts of the country. But a repeat of the hefty claims dent left by its 2018 namesake has failed to materialise.

Storm Darcy and cold air from Scandinavia and Russia this February – dubbed the ‘Beast from the East Two’ – saw temperatures plummet to minus 16C with multiple national severe weather warnings issued.

The first half of February was generally cold with bitter winds, with some locations exceeding their February long-term average rainfall within the first week. The cold weather brought snow showers, especially on the eastern side of the country, with depths exceeding 30cm in few places, according to the Met Office. 

The cold snap’s namesake, 2018’s ‘Beast from the East’, brought 10 days of heavy snow and caused widespread disruption across the country. Property insurers saw a significant peak in claims in the first quarter of 2018 with weather-related claims worth £328m, of which £198m were from the domestic weather-related escape of water claims, according to the Association of British Insurers.

In contrast, PWC has estimated the claims impact from the ‘Beast from the East Two’ is between £50m and £80m, compared to a £200m insurance cost three years ago.

Mohammad Khan, PWC general insurance leader said: “Although the weather was severe, without a doubt, less homes were affected from an insurable event perspective.

“Although it was very cold, if you look at the damage that was actually done to most homes, it was probably pipes freezing and some pipes maybe got broken because of the freeze and the fall but actually that’s less extensive damage than for example when you have floods and storms.”

In numbers:

2018 ‘Beast from the East” insurance impact - £328m out of which £198m was for domestic weather-related escape of water (source: ABI)

PWC estimated insurance cost of ‘Beast from the East Two’ - £50m to £80m

Claims received by NFU Mutual this year – 500 claims with expected cost of £3m

Claims received by NFU Mutual in 2018 – 7000 claims costing £55m

Expected cost of the 2018 ‘Beast from the East” on motor insurers - £33m

Cost attributed by LV to severe weather in 2018 - £17m

Preparation

Insurers said they have prepared for the worst “taking standard precautions”. However, the event was not as significant as the original ‘Beast from the East’ in terms of claims cost and volume.

Paul Branch, head of claims at NFU Mutual, said: “Despite the media reports, the weather intelligence services we partner with were not expecting this to be a significant event, and fortunately for the majority of our customers, this proved to be the case.”

During the two-week period, NFU Mutual said it received just over 500 claims with an expected cost of £3m with some customers suffering “significant and distressing damage”.

Branch added that the original Beast from the East resulted in nearly 7000 claims costing the insurer £55m.

While this year’s weather event was not “nearly comparable to the 2018 storm in terms of weather extremity”, according to Branch, the lessened impact could be to some extent be due to people staying home during the Covid-19 lockdown.

Branch explained: “During freeze events some of the biggest impacts are usually [felt on] unoccupied properties, where customers go on holiday without leaving the heating on. Burst pipes go undiscovered and the damage can be both extensive and expensive. We’ve seen fewer cases of this during the recent storm than we would expect. With no holidays, and people working at home with the heating on throughout the day, ambient temperature is being maintained in houses and pipes are less susceptible to freezing.”

Robin Challand, claims director at Ageas said that the household claims were significantly lower this time around and the insurer saw more claims relating to accidental damage while the original ‘Beast from the East’ brought more escape of water claims.

Andrew Moore, home claims director at RSA insurance also said that while the insurer expected “a moderate increase in claims for burst pipes” the level of claims received was lower than normal.

Allianz, Axa, LV and  Zurich also said that that the impact of the ‘Beast from the East Two’ was not as severe as in 2018. Allianz noted a significant drop in the number of claims for burst pipers and tanks against 2018 and a sizeable drop in motor claims due to lockdown measures.

Minimal impact

Overall loss adjusters reported some claims spikes, but nothing on a level they were not already prepared for.

Questgates said it received a “spike in claims in very specific areas”.

Colin Ganson, director of property at Questgates said: “The volumes were not large and claims included some floods and burst pipes.”

Glenn Thornton, head of major and complex loss for the UK and Ireland at Crawford & Company added that “generally” the severe cold spells have a big impact on insurance claims when they happen around holiday times.

He explained:  “One of the main causes that you get is that because there’s nobody home, you get freezing of pipework in the loft.  You then get a subsequent burst that will go through the rest of the house. If you’re away for a few days, you come back and your house is devastated. What we probably saw this time was that because virtually everybody was at home, the heating is on and there is a constant flow of water through the water system.”

As for commercial properties, many businesses will have taken precautions to prevent damage while offices and premises are empty.

Toby Knight, head of UK operations at McLarens, said: “Whilst the weather conditions were extremely unpleasant in several areas and with a focus on the more eastern side of the UK, these did not translate into a large volume of claims for us. Our concentration on the commercial and specialist lines of business will also have been a factor and does ensure we are able to manage such incidents without being overrun.”

On business premises, Knight added: “In terms of commercial properties, with many staff on lockdown, many measures would have already been taken to address and minimise the risk of damage to vacant buildings. We expect that businesses will have been vigilant around this and there was plenty of notice such that measures could be undertaken. This would also have had a positive impact on managing the potential extent of the damage.”

‘Digital toolkit’

With lockdown accelerating tech use, loss adjusters and insurers believe innovation is keeping costs down.

Loss adjusters have used apps to survey damage where appropriate, with ‘digital toolkits’ speeding up the claims process. Loss adjusters also pointed to drones as a useful tool in the adjusting arsenal.

Rhys Moore, retail claims director, Axa said: “We and our supply chain partners have a range of tools to help us during these types of events, and they have become even more relevant against the backdrop of Covid. Our use of video technology to interact with customers without the need for an onsite visit has proven to be a huge benefit, particularly for people concerned about Covid or shielding. For instance, it is possible to scan a room in 3D for later review, which reduces the time spent in a customer’s home. This is just one of a range of tools that are helping to offer better services and an improved customer experience.”

There is anecdotal evidence that more people have become used to communication apps like Facetime and Whatsapp during the lockdown, according to Questgates director of property Colin Ganson.

Smart home apps are giving people the power to control heating systems and check up on their homes even when they are away. 

Scott Cameron, Sedgwick commercial property operations director, said that “more and more people are connecting their home heating systems to heating apps”, adding that many commercial properties also have monitoring systems in place.

 

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