General Insurance Article - UK flood damages are manageable for insurers

 Fitch Ratings believes that the losses relating to the 2013/2014 winter floods and storms will be manageable for UK non-life insurers, according to a new report.. The overall cost to the industry is likely to fall within previously published loss estimates of around £1.2bn, if the insurer-reported loss figures to date are in line with the market share for those companies. This would equate to a 3.4pp increase in the sector's combined ratio. 

 Consequently, Fitch anticipates that the negative effect of weather related losses on the sector's earnings will remain limited. These insurers are typically large, well-diversified players with the ability to offset losses through other profitable lines, as well as being able to capitalise on price increases post-event.

 Fitch expects earnings to remain under pressure. The underwriting performance of personal motor business is likely to rely increasingly on prior year reserve releases to sustain calendar year underwriting performance. Fitch also expects the contribution to earnings from investment income to remain subdued.