Summer 2026 set a subsidence record. The claims are still arriving.
The UK had its hottest summer on record, the second record in two years. Insurers paid a record average of £20,000 per domestic subsidence claim between April and June, before the driest weeks. A business that owns buildings on clay carries the same exposure, and should expect it to cost more at renewal.
The PikaGuard Team••4 min readSubsidence claims in the UK are running at record cost, and the figures published so far stop before the summer that will drive the next set. Home insurers paid £72 million on subsidence between April and June 2026, at a record average of £20,000 a claim. July then brought exceptionally low rainfall to every region of England, and soil moisture deficits close to the maximum recorded in 1961. Clay shrinks as it dries, and the cracks are found and reported in the months that follow. We expect subsidence to cost more to insure at 2027 renewals for any building on shrinkable clay.
The weather
The Met Office puts the UK’s mean temperature for summer 2026 at 16.5°C, provisionally the highest since its series began in 1884. The previous record, 16.1°C, was set in 2025. Rainfall was 77% of the 1991–2020 average. The Met Office estimates that human-induced climate change made a summer this warm around 130 times more likely.
The claims
The Association of British Insurers publishes subsidence figures for homes each quarter. The second-quarter rise followed a record warm spring in England and Wales, so it reflects the spring, not the summer.
| Period | Domestic subsidence paid | Average claim |
|---|---|---|
| 2025, full year | £307 million, up 10% and a record | n/a |
| Q1 2026 | n/a | £17,820, up 9% on Q1 2025 |
| Q2 2026 | £72 million | £20,000, a record, up more than £2,000 on Q2 2025 |
Flood moved the same way. Domestic flood claims rose 38% to £312 million in 2025, and weather-related property claims rose 14% to £1.2 billion.
Pricing has not caught up
UK home insurance premiums were 9% lower in January 2026 than a year earlier, while claims ran at record levels. Deloitte projects a combined ratio of 102.1% for UK home insurers in 2026, which is an underwriting loss. A market that loses money on a peril reprices it. Commercial insurers face the same weather on the same clay, so a business on clay should expect the same direction at renewal.
The exposure is growing. The British Geological Survey estimates that 1.8 million UK properties, about 5% of the total, will be highly or extremely likely to be susceptible to shrink–swell subsidence by 2070 under a middle emissions scenario. Under a higher scenario the figure is 4.2 million, about 11%.
What this means for a business
The ABI series above covers homes. The mechanism does not distinguish a house from a warehouse: a building on shrinkable clay, with trees nearby, moves when the clay dries. London and the South East sit on the most susceptible clays.
- Whether subsidence is covered at all. Some commercial property policies exclude it, or add it by endorsement.
- The subsidence excess. Subsidence usually carries its own excess, set well above the standard one. That excess is a loss the business has chosen to retain, and it should be held in reserve as one. When you should take the hit yourself sets out how to size it.
- Flood, separately. Flood Re, the scheme that holds down flood premiums for homes, does not cover businesses. A business’s flood cover is priced on its own risk, and the 2025 flood figures will reach that price too.
What would change this view
A wet winter would rehydrate the clay and lower the risk for 2027. It would not reduce the claims from 2026: that movement has happened. A third record summer in a row would move subsidence from a bad-year peril to a standing cost of owning buildings on clay. Risks are dynamic explains why a risk priced on last decade’s weather drifts out of date.
Sources
- Met Office, Summer 2026 provisionally hottest on record for the UK, 1 September 2026, updated 17 September 2026.
- Association of British Insurers, Average claim for subsidence reaches record £20,000 amidst hot weather, August 2026; and Insurance Times, Average subsidence claim reaches £20,000 as record spring drives surge, 3 August 2026.
- Milliman, UK property insurance subsidence event: a 2026 reserving update, 20 August 2026. ABI figures for 2025 and Q1 2026, July rainfall and soil moisture, January premiums, and Deloitte’s combined ratio projection.
- CNN, Buildings are sinking and cracking in one of Europe’s largest cities, 11 September 2026. British Geological Survey projections.
This note gives general information on events and how insurance responds to them. It is not insurance, legal, actuarial or investment advice. Figures are as reported by the sources listed on the dates given, and will move.