How has the property industry been impacted by climate change?

Data from the Met Office states that 2024 was the UK’s fourth-warmest on record, which would suggest that Brits experienced a sparkling summer of sun and heat.

However, weather was extremely varied with storms and floods plaguing large areas of the UK. As a result, insurance claims shot through the roof.

How bad was 2024, though, and what can housing developers do to future-proof their projects?

Property insurance claims 2024

UK property insurance claims are expected to reach £5.5 billion in 2024, which is the highest payout figure since 2007 – the year of extreme summer floods.

Around £1.2bn of that figure for 2024 is expected to the claims specifically related to weather damage, such as floods, freeze, subsidence, and storms – double the levels between 2017 and 2020.

In total, 22% of the claims paid out by property insurance companies in the UK for 2024 will be related to weather.

Furthermore, Deloitte’s analysis shows that the final quarter of 2024 (October to December) could total £1.4bn in damage claims.

This rising trend of weather-related claims emphasises the threat that climate change poses to the insurance industry. A Deloitte survey taken in November 2024 revealed that 90% of home insurance professionals saw climate change as a risk to their business.

Insurance partner at Deloitte, James Rakow, said: “Our analysis and expectations show that 2024 will be the most expensive year for property insurers since the summer floods of 2007. With extreme weather events such as storms and flooding becoming more commonplace in the UK and beyond, insurers likely won’t be surprised by this.

“As the final claims for 2024 are counted, insurers will be assessing the impact of weather events during the final quarter and working out what the potential impact on their trading plans and consumers’ premiums will be.”

Looking ahead to 2025, Rakow said: “Weather-wise, 2025 has not got off to a great start. We’re less than two weeks into the year, and due in large part to flooding, insurers have already likely seen the levels of adverse weather claims that they would ordinarily expect for the whole month.

“Learnings from 2024 and early 2025 will show that insurers have tough choices to make, with weather events associated with climate change a real and present danger. Insurance executives will be working hard to balance the needs and expectations of customers, regulators, markets, and shareholders.”

What have property insurance claims been like since 2017?

Property insurance claims have steadily climbed, year on year, from 2017 to the present date with 2020 the one outlier.

As you can see from the below table, insurance payouts in 2017 were just over £3bn but by the end of 2024, that figure has almost doubled despite just a 2% difference in the number of weather-related claims.

How can property developers future-proof their projects?

The Met Office expects summer temperatures to rise by 5.4°C by 2070 with winters 4.2°C warmer. By 2100, sea levels in London could rise by 1.15m and while the average summer rainfall could decrease by a mammoth 47% by 2070, winter rain could increase by 35%.

As such, property developers must act now when starting new construction projects to ensure their buildings can withstand this rapid climate change as soon as 45 years away.

Future issues with temperature could involve freezing pipes, overheating, and surface water flooding.

Considerable flooding from rain storms can be a huge issue for many properties, which is another major aspect for developers to target.

Specialised draining systems should be adopted to ensure surface water can drain effectively rather than being allowed to pool and cause damage to homes.

Thermal comfort resilience is a key issue for new homes, too.

When developing property, contractors must carefully design the building envelope and thermal massing. Getting these two aspects of the design and build correct is key to ensuring residents are comfortable in both hot and cold weather.

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