The UK’s weather is becoming more extreme and it’s beginning to affect UK businesses.

Changes in the weather, no matter how large or small, can take its toll on the UK’s small business population. From damaged shop fronts and flooded basements to disrupted supply chains, reduced customer demand or increased operational costs, small businesses can face big risks whatever the weather.

At AXA, we want to find out more about how the weather is impacting the UK’s businesses, what the forecast looks like going forward, and what SMEs can do to weather the storms ahead.

Here, we’ve used our own data on small business claims to map out which weather events are responsible for the most damage, to help better prepare the UK’s small businesses for the future.

The UK’s changing weather patterns

UK weather is becoming more turbulent and more extreme as a result of climate change.

Temperatures are increasing. From records dating back to 1884, ten of the warmest years for the UK have occurred since 2002, and the 21st century so far has been warmer than the previous three centuries in England. And these trends are predicted to continue for the next 50 years.

By 2070, the Met Office projects that UK winters will be between 1 and 4.5°C warmer and up to 30% wetter, while UK summers will be between 1 and 6°C warmer and up to 60% drier.

As the temperature increases, more water is absorbed into the air from the oceans. This then forms clouds with more water droplets than normal, which falls back to the ground as heavy rain. As the earth continues to heat up, the rains will continue to get heavier.

The latest State of the UK Climate report shows that the UK has become wetter over the last few decades, with the 2011-2020 period finishing 9% wetter on average than the period between 1961-1990. Since records began in 1862, six of the ten wettest years across the UK have occurred since 1998.

Rainfall events exceeding 50 mm have also increased in recent years, pointing to an increase in frequency and intensity of rainfall across the UK. Some areas of the UK are being harder hit by these changes than others. Scotland has seen a greater increase in rainfall, while areas of south east England have seen lower levels of change.

Weather changes don’t just result in more rainfall. Some continued impacts of changing weather include increased localised flooding, damage to nature and ecosystems, impacts on plants and animals, changes to forestry, and damage to infrastructure. All of which can have a big impact on people, businesses and industries.

The rising tide of claims

To find out how the UK’s small businesses are feeling the impact of changing weather, we looked at AXA’s commercial property claims relating to weather since 2018.

Average commercial property claims are rising

According to our data, claims relating to weather damage to commercial property are rising on average.

From a low of £55,737 in 2018, total average claim costs per year spiked in 2021 at £126,413 as a result of Storm Christof, Storm Arwen and significant flooding in England in July 2021.

However, the biggest total average claim cost was in 2023 with £143,178. Storm Babet in October 2023 was the most severe and disruptive storm in 2023, with widespread flooding and massive rainfall across the UK. In total, there has been a 73% increase in the average cost of weather-related claims between 2018 and 2023.

Looking at the average claim cost per month, we can see stark trends.

Interestingly, the data shows that some of the biggest spikes in claims coincide with flooding events which occurred in summer months, with July being particularly costly in 2019 and 2021.

While we may expect summers to hold some of the fairest weather of the year, the changing climate is making summer more volatile and, in some cases, more prone to extreme weather events like flooding.

Which weather causes the biggest business disruption?

According to the data, the main types of weather events which are impacting the UK’s businesses are flood, lightning, rain, snow and wind.

Comparing 2018 to 2023 claims, we see sweeping changes in which weather events are causing the most insurance claims.

While lightning claims are down by 35%, wind-related claims are down 67% and claims related to snow are down by 83%, we see claims rising for water-related incidents like rain and flooding. While rain claims have risen by 5%, the largest increase has been in flooding claims, up 37% over the five-year period from 2018 to 2023.

Ingress of water caused by rain and flooding is a huge issue for business and is some of the most costly causes of damage to a building in a number of areas:

Foundations
Flooding causes huge damage to a building’s foundations. Pressure caused by water can result in cracks in the foundation, which can put the structural integrity of the whole building at risk. Repairing these foundations can be expensive, time-consuming and can have a knock-on effect for other parts of the building too.

Loss of data
It’s not just the physical building which can be impacted by water damage. In some cases files, computers, servers and so on can be damaged too, which may lead to lost work, loss of data, loss of confidential information or important documents and legal paperwork.

Rot and erosion
Water can penetrate the walls, the floors, the fixtures and fittings of any building, resulting in extreme damage which can take weeks, months or even years to fully recover from. In some cases, when drying out after a flood, rot and erosion can begin to set in, causing even more complications.

Loss of business income
If your business premises is flooded, your ability to trade is impacted. It’s unsafe to open your doors to staff or customers, stock may be damaged or destroyed, and until the building is repaired it could mean you may not be able to trade. This all means you cannot make an income while some costs, like wages, continue to add up.

Future forecast

The most up to date UK climate projections (UKCP18) provide an overview of how the UK climate could continue to change in future.

Experts predict that winters will get wetter and summers will get drier, on average. In addition, rain that falls in summer will be heavier than what we currently experience – by around 25%. This will increase the amount of surface water and flooding, particularly in urban areas.

And this heavier rainfall will keep having an impact on the UK’s infrastructure. More rain means increased chances of flooding, causing building and structural damage. More rain means increased pressure on transport, more disruptions and accidents, and delays to supply chains and deliveries. And more water on the streets means more chance of overwhelmed drains, causing road closures and other delays.

So with the future looking more uncertain, what can small businesses do to prepare themselves?

Protecting businesses from extreme weather

While some of the most common types of insurance covers like Public Liability and Employers’ Liability may be useful to an extent in covering your business in the event of a storm, they won’t cover the impact of a storm on your business.

For example, Public Liability may protect you if a customer slips on some rainwater in your premises and is injured and decides to make a claim against you. However, it won’t protect your business premises if you suffer flood damage or ingress of water.

Instead, covers like Contents insurance will help cover your stock, fixtures and fittings and some business equipment if they get damaged in a flood, for example.

Buildings insurance, meanwhile, will cover buildings, external signage, patios and car parks from damage suffered during weather events, and loss of income cover will protect you if you need to cease trading for a period after a storm. You should always read the terms and conditions of any insurance policy to be clear on what you are and are not covered for, and to what value.

All links are checked and valid at time of publishing, 25 September 2024.