Aviva Estimates UK July Flood Costs at $336 Million

Aviva plc, the UK’s largest insurer, estimates that the “July floods in Gloucestershire and the surrounding areas to be in the region of £165 million ($336 million).” The bulletin noted that the estimates include reinsurance recoveries, and also indicated that “these costs will impact the group’s general insurance results in the second half of the year.”

Aviva’s UK general insurance business, Norwich Union Insurance, will suffer the heaviest losses. Aviva stressed that a “network of loss adjusters, contractors and claims teams is on site at all flood areas to assess the full extent of the damage,” and that call centers “have been doubled to deal with the extra calls.”

Norwich Union’s chief executive Igal Mayer commented: “Having visited Gloucestershire myself, I’ve witnessed at first hand the traumatic and emotional impact the floods have had on our customers. We’re bringing in additional contractors and specialist equipment to ensure repairs are carried out as quickly as possible, and we’re in discussions with local authorities to find the best solution to providing temporary accommodation for those who have had to leave their homes. We will continue to do everything we can to help our customers affected by these devastating events return to normal as soon as possible.”

Aviva’s loss estimate from the July floods comes on top of the initial cost estimate of £175 million ($356.2 million) for the floods that hit the UK in June. It remains unchanged. Aviva said that, although it “remains fully committed to a group COR target of 98 percent, due to the exceptional nature of the recent bad weather claims in the UK in 2007 there is a degree of uncertainty concerning Aviva’s ability to meet the group target in 2007.

“Aviva has exercised its reinsurance option to limit the maximum cost of future similar events in the UK this year to £110 million [$240 million], the cost of which is included in the estimate of £165 million above.”

Source: Aviva – www.aviva.com