December - the big freeze for home claims market

The severity (indemnity) of this event will be >200% of what insurers experienced in the 2018 ‘Beast from the East’. Although the most obvious root cause would be the exceptional claims-inflation experienced since 2021, there are several other unique factors that stand this freeze out from recent home claims surges.

The depth of the freeze was particularly exceptional. For up to 96 hours some regions maximum temperature did not rise above -1c, leading to pipes freezing quickly, but it was the speed of the thaw that was unprecedented and caught homeowners and insurers by surprise. Some parts of the Glasgow region, for example, experienced a >15c swing in maximum temperature in a 48-hour period, which led to explosive bursting pipes rather than the more gradual damage experienced in 2018.

This thaw and damage landed over a weekend where some customers may have struggled to register claims with their insurers (excepting digital channels in several cases), which led to the damage worsening in many cases. By Monday 19^th December, following two Christmases cancelled by COVID,, some insurance sector call centre resources were depleted as people started their Christmas holiday breaks, delaying some notifications to insurers, TPAs or drying suppliers, where multi-floor damage would have worsened. Some loss adjusting practices reported receiving instructions on average up to 8 days after customers notified their insurers, which may have been exacerbated by policyholders being away for the Christmas period.

After a triple 2022 event year with February storms, summer subsidence and a December freeze surge, multiple event years are seemingly becoming normalised. Insurers and their supply chains must adapt quickly to this new norm by expanding digital notification offerings and flexing resource from the quieter summer months to more busy winter periods.