14 February 2011

Scots can weather the storm of price hikes on insurance

Scots can weather the storm of price hikes on insurance : INSURANCE claims doubled in December to £1.4 billion as the weather took its toll on our homes and cars. Burst pipes caused most problems, with more than 100,000 claims totalling £680 million, according to the latest figures from the Association of British Insurers. More than 250,000 vehicles were damaged as a result of the snow and ice on the roads, leading to £530m of claims. In all, this year's claims bill dwarfed last December's of £650m.

Anyone who suffered the Canadian-style blizzard in Glasgow on 6 December or the record arctic temperatures in the highlands in the same month will testify to this. However, the clouds that brought the snow may turn out to have a silver lining for Scots in the long run - thanks to insurance.

The same December that brought misery to many areas of Scotland was also the country's sunniest since 1929. So perhaps our dismay at recent meteorological traumas should be turned towards the way that forecasters describe and calculate weather events. The real problem is how these predictions are interpreted. Forecasters and insurance companies focus on "return periods" when considering the likelihood of major climatic events. They apply to floods, windstorms, snowfall and other elemental perils and estimate the length of the "normal" gap between events. In the case of floods, a 1-in-50 return period means that looking back over history, a flood of a certain size should only occur once every 50 years. Or, in any one year, there's a one-fiftieth chance it might happen again.

As many insurers sit at their desks scratching their heads at the impact of two winters in one - as we saw in December - there has been an obvious increase in the frequency of extreme weather events, across the UK.

While return periods are becoming narrower, the Scots, unlike England and Wales, have done a few sensible things with their planning and flood laws in recent times that should help the cost of their home insurance cover to become cheaper relative to the rest of the UK over time.

Two things stand out. Firstly, the requirements in Scottish planning laws that require a "belt and braces" approach to roofs. Quite simply, roofers will usually ensure every tile is double-nailed down. In England and Wales, on millions of homes only every third tile gets the nails! When storms wreak havoc more Scottish properties are better prepared. We secure the future of our homes by safeguarding their structure. Money invested in roofs, insulation, guttering and wall-tie maintenance will pay you back handsomely.

Secondly, flood planning and prevention. Scottish local authorities have a statutory obligation to take flood risk into account. They have a statutory duty to maintain water courses. They have Flood Liaison and Advice Groups and building regulations on flood resilience. All of these are lacking south of Hadrian's Wall.

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