After winds of up to 165MPH lashed Scotland and Northern England over the weekend, insurers are preparing for the inevitable stampede of claims.
PWC said an estimate of the precise cost of the storm was going to be difficult, as they are expecting a large value of low value claims. The main claims to come out of the storms are expected to be from damaged roofs and tree damage.
“It is hard to put a value on the potential cost of the damage as there have been few recent storm losses in Scotland to benchmark against. However … the insurance industry should step in to take most losses to household policies,” said Mohammad Khan, Insurance Partner at PWC.
PWC estimated that the cost of the storms on the economy as a whole could be as much as GBP100 million due to daily productivity loss. But strangely, this rarely effects GDP, as the losses incurred are normally made back through other means. For example according to PWC in 1962 – the coldest winter on record – manufacturing output fell 7 per cent in Feburary, but there was actually no negative impact on GDP because consumers and industry spent much more on heating.
But not all businesses will make back the money they lose as a result of the storms. Industries such as retail and hospitality may see drastic losses while customers stay at home because of storms, during what is normally the most profitable time of the year for them.
