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Global - UK insurers see huge losses north of US$2.2 bln from Dec floods

Source: Asia Insurance Review | Feb 2016

Insurers in UK are expected to see huge losses from the floods that hit Scotland and North of England in December. Initial estimates of insured losses are upwards of GBP1.5 billion (US$2.2 billion). 
 
   While Aviva is deemed the most exposed going by market data, RSA and Direct Line may suffer larger losses because they are more UK-focused, said Wall Street Journal. 
 
   Reinsurance is the other determinant. Reinsurance will kick in only after GBP75 million per event for RSA, GBP120 million per event for Aviva and GBP150 million per event for Direct Line. 
 
   Excess capital in the reinsurance markets had helped loosen the terms for insurers and extended the time frame within which insurers can claim a series of disasters as a single event, said WSJ. At roughly 21 days, this is still too small to capture all of December’s flooding and the winter has at least two events so far. 
 
   According to WSJ, Aviva and RSA had bought extra covers, in the form of multi-event reinsurance which cuts the cost of a second or third disaster in any year. For Aviva, it would cap the losses at GBP175 million, however much the repair bills rise over the months ahead. RSA is estimated to have losses of about GBP100 million but this is before the multi-event cover kicks in, which is yet to be assessed. 
 
   For Direct Line, it has estimated its initial losses to be between GBP110-140 million.
 
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