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Insurers are set to pay out £1.6bn for weather-related property claims made last year as homeowners in the UK faced storms, flooding and higher rebuilding costs after catastrophes.
Analysis of industry data by Deloitte predicts the total for claims linked to weather for 2025 will be higher than the £1.3bn paid out in 2024 and more than double the annual amounts between 2017 and 2021.
Total property insurance payouts in the UK are meanwhile set to hit a new record of £6.12bn in 2025, up from £6.08bn in 2024, according to Deloitte, whose figure includes preliminary estimates for the fourth quarter.
The expected rise in payouts comes at the same time as the cost of property insurance fell last year from record highs in 2024, with insurers battling to retain market share.
More than a quarter of overall claims last year were due to weather events such as Storm Éowyn in January 2025, which left about 1mn homes without power.
Subsidence claims had risen, Deloitte insurance partner Cherry Chan said, as “periods of drought last year combined with the extremely wet conditions of 2024” to wreak havoc on building foundations.
The figures come as the UK faces further heavy rainfall in February, with 97 flood warnings in place in England as of Tuesday afternoon, according to the Environment Agency.
The increase in claims for 2025 comes amid a relative fall in premiums, which has begun to squeeze insurers. After a run-up to historically high prices in 2024, home insurance prices declined for three consecutive quarters last year. The average price of a combined building and contents policy was £384 in the third quarter of last year, £15 lower than a year earlier.
Insurance executives have reassured shareholders that the drop in premiums is slowing. “We’re being more disciplined,” Admiral UK insurance chief executive Alistair Hargreaves said in November, following recent premium declines in home insurance.
Aviva chief executive Dame Amanda Blanc said on a third-quarter analyst call in the same month that the decline in premiums was now “stabilising” and the insurance business remained profitable.
The largest drivers of rising claims costs in the UK were higher building and labour costs, catastrophe risk modellers told the FT, while climate change had fuelled a rise in costly weather disasters.
“You’ve got this massive interplay of construction costs, inflation, post-pandemic, post-Brexit material and labour costs,” said Oliver Wing, chief scientist at flood modeller Fathom. Climate change meanwhile was creating the conditions for more extreme weather, he said.
Wing pointed to so-called “precipitation whiplash”, as warmer temperatures lead to longer-lasting rainfall as well as more evaporation, drying out soils more quickly. He said climate change was making the transition between droughts and floods more “abrupt”.
“When it rains you get this persistent, longer-duration rainfall,” Wing said. “When it’s wet it stays wet, and when it’s dry it stays dry — you get this clustering . . . these are the sort of patterns we expect from climate change.”
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