Counting £1bn cost of the Arctic weather

The Arctic snap not only brought the economy to a grinding halt but also caused £38m of insurance claims a day, according to new figures released by trade body the Association of British Insurers (ABI).

Insurers received a total of £1.4bn of claims during December, more than double the £650m of claims relating to the snowy weather the previous year.

The amount of damage caused was so high because of the severity of the weather which engulfed nearly all the country for an extended period of time, said the ABI.

Insurers dealt with £900m of property claims during the month – the highest ever caused by a cold snap.

Scotland, which was subjected to particularly cold conditions with temperatures dropping as low as minus 20C in some parts, reported £90m of damage to property.

Burst pipes caused more damage than any other problem and were responsible for £680m of claims, which was 35 per cent more than in the whole of the previous winter.

There were more than 100,000 incidents of problems with pipes, which caused an average of between £6,500 and £7,200 of damage.

More than a quarter of a million vehicles were damaged as icy conditions made the roads dangerous and helped cause £530m of damage.

Nick Starling, the ABI’s director of general insurance and health, said: “Insurers always respond quickly to the large numbers of claims that often follow from bad weather and helped thousands of customers get through a very tough December.

“The big freeze highlighted that when bad weather strikes there’s no substitute for insurance.”

He said that although the past two winters had been costly for insurers, the industry would do all it could to ensure the market remains competitive for consumers.

A spokesman said there was no evidence that premiums had gone up as a result of the cold weather but said insurers always look at the cost of claims when setting prices.

December’s cold weather caused widespread disruption and helped to force the economy into a surprise 0.5 per cent contraction in the final quarter of 2010.

Economists estimate that GDP would have been flat if not for the impact of the weather, which created havoc with travel and kept people from work.