Snow Storms: What does it all add up to?

Snow UK aerial
In the last few weeks, Europe has been hit with unusually bad weather. Much of the UK was brought to a halt by snow storms which also affected continental Europe as far south as Rome. In England, at least, we are now struggling with the aftermath of water shortages caused by burst pipes which has led to the closure of both the Rolls Royce and Cadbury factories in the Midlands. 

It seems inevitable that all of this will be reflected in insurance claims and that may well raise questions about causation but also about the aggregation of those claims for reinsurance purposes. For example, there may be issues over the number of events and how, if at all, those events should be separated: where does the Beast from the East give way to Storm Emma?

Another issue which may arise is how the hours clause will be applied at the reinsurance level. Modern hours clauses often have much more flexible geographic requirements so that losses do not have to have occurred in the same place or area in order to be aggregated. Thus, some clauses allow aggregation of losses arising from the same peril which occur within the specified time period anywhere in the same country, on the same continent or indeed anywhere in the world. Clauses of this nature may, therefore, allow the aggregation of UK storm losses with those occurring in continental Europe. These are issues which both cedants and reinsurer will no doubt be considering carefully both for the purposes of a presentation of existing claims and when considering future wordings.

The extent of the continent of Europe is sometimes a matter of debate in this context but perhaps one of the few certainties about Brexit is that it is unlikely to change that discussion!

Simon Cooper