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Published: 04/09/2026
With a substantial El Niño developing in the Pacific, the UK is bracing for more extreme weather in the months ahead. BCIS principal consultant Cos Kamasho explains why the greater risk of weather-related property damage means the application of rebuild cost data in the insurance life cycle can no longer be underestimated.
Countries around the world are bracing for months of extreme heat, flooding, drought and disruptive weather(1) as an abnormally strong El Niño develops in the Pacific Ocean.
Its arrival could trigger more extreme weather in the UK, raising the risk of property damage and policyholder exposure to existing underinsurance where claims are made. From a financial position, maintaining realistic and regularly updated sums insured using the latest rebuild cost data is a vital line of defence.
While a naturally occurring climate phenomenon, the El Niño building in the tropical eastern Pacific has been described as ‘unprecedented’ and is expected to become one of, if not the strongest, on record.
It is unclear to what extent man-made climate change has influenced the intensity of this El Niño. However, an exceptionally strong El Niño occurring alongside already elevated ocean temperatures could increase the scale of its global impact.
Met Office forecasts indicate that the event could increase the likelihood of wetter and stormier conditions across north-west Europe, including the UK, during the coming autumn and early winter months(2).
It is also widely expected to contribute to 2027 being the hottest year on record, potentially increasing the likelihood of further heatwaves and dry conditions in the UK.
For property owners and the insurance sector, the practical issue is the potential for intense and changeable weather patterns to increase property damage. This may occur through clay shrink-swell and subsidence – which can cause structural cracks – wildfires, severe storms and flood damage, including from sea and river sources or surface water flooding when heavy rain falls on dry, compact ground.
The scale of existing exposure is significant. An estimated 6.3 million properties in England(3) are at risk from river, sea and surface water flooding, or flooding from a combination of these sources, while up to 4.2 million British properties could be vulnerable to clay shrink-swell by 2070(4).
Where property owners need to make a claim for weather-related damage, existing underinsurance, which is already a widespread challenge in the UK, can leave them facing a financial shortfall.
This can apply during a partial loss too. Where a policy includes an average clause, the amount paid towards a claim will be proportionate to the level of underinsurance.
Underinsurance can arise for several reasons. These include the use of a property’s market value rather than its rebuild cost to inform the sum insured, relying on outdated rebuild cost information or routine indexation at renewal, or allowing too much time to pass between reviews.
Against a backdrop of heightened weather-related risk and rising building costs, regularly reviewing sums insured is becoming increasingly important. Current rebuild cost data provides stronger evidence for these reviews by reflecting factors such as tender price inflation, changing regulatory requirements and cost movements across different materials and work packages. This can help property owners, supported by brokers and other insurance professionals, make better-informed decisions about the level of cover needed.
The substantial and rising cost of weather-related claims reinforces the importance of due diligence.
In 2Q2026, home insurers paid out £72 million for domestic subsidence claims with the average claim reaching a record £20,000, according to data published by the Association for British Insurers (ABI)(5).
In the same quarter, the average claim for damage to people’s homes and possessions from flooding, storms and burst pipes reached £8,548, up 12% on 2Q2025.
More broadly, insurers reportedly paid £1.2 billion for damage to homes and businesses caused by extreme weather in 2025(6).
As the current El Niño approaches its peak and the potential for further extreme weather remains, there is a clear case for assessing whether sums insured continue to reflect current rebuild costs sooner rather than later.
Further, property-specific rebuild cost data can provide a more robust basis for setting and reviewing sums insured than relying on broad averages alone.
For example, BCIS reported an average 4.9% increase in the rebuild costs of houses and flats in the year to January 2026. However, movements varied by property type and cost element, meaning the headline figure is unlikely to reflect the change in the rebuild cost for an individual property.
Inception and renewal provide important opportunities to review the basis of the sum insured and account for changes in property-specific cost information where appropriate.
Alongside surveyors who conduct formal reinstatement cost assessments, brokers and other insurance professionals have an important role in helping policyholders understand rebuild costs before a claim arises. This includes explaining the distinction between market value and rebuild cost, how an appropriate rebuild cost can be established and how that information can inform the sum insured.
Rebuild costs will continue to respond to changing market conditions, input cost changes and updates to policy and regulation. With greater exposure to extreme weather increasing the likelihood of existing underinsurance being unearthed, understanding how much a property would actually cost to rebuild has become all the more important.
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(1) United Nations – El Niño is surging. Months of extreme heat could follow - here
(2) Met Office – An ‘unprecedented’ El Niño and its implications for the weather forecast - here
(3) GOV.UK – Tackling flood risk inequality - here
(4) BGS – Latest research emphasises climate-related subsidence risk to millions of British homes - here
(5) The ABI – Average claim for subsidence reaches record £20,000 amidst hot weather - here
(6) The ABI – How to prepare your home ahead of the ‘unprecedented’ El Niño this autumn and winter - here
