What has the summer drought taught us about careful insurance planning for business?
Introduction
This summer’s prolonged dry spell is more than a weather anomaly; it’s a commercial risk event unfolding across the UK. With large regions experiencing officially declared drought conditions and water being consumed faster than it can be replenished, the impact on businesses is becoming increasingly visible.
For B2B insurance brokers, this shift matters. Drought rarely appears as a standalone insured peril, yet it triggers a chain reaction of indirect losses: subsidence, wildfire ignition, supply‑chain disruption, water‑dependent business interruption, and secondary building damage when sudden rainfall hits dried‑out structures.
The Dry Summer Effect: What This Year’s Drought Means for Your Business Clients
Subsidence: The Most Immediate and Costly Impact
Subsidence remains the most significant drought‑related concern for commercial property owners. Clay‑rich soils shrink as they dry, causing ground movement beneath buildings. This year’s dry conditions follow several recent hot summers, meaning the soil has not fully recovered from previous shrinkage cycles.
Commercial subsidence claims have risen sharply in recent years, with average claim values climbing and insurers applying tighter scrutiny at renewal. Older buildings, specialist construction materials and properties in known clay‑soil regions face the greatest pressure.
Domestic subsidence claims - a useful early signal for what's happening to commercial property in the same regions, have surged in recent years:
£153 million paid out in the first half of 2026 alone
Average claim values now exceeding £17,800, the highest on record
Commercial claims tend to follow the same soil and weather drivers, and are typically for higher amounts given building size and complexity.
What brokers should do:
Encourage clients to document cracks or structural changes now.
Prepare them for potential increases in excesses or tighter acceptance criteria.
Flag high‑risk postcodes early in the renewal process.
Wildfire Exposure: A Growing Threat for Rural and Peri‑Urban Businesses
Wildfire risk is no longer confined to remote landscapes. Dry vegetation, heatwaves and prolonged moisture deficit have created ideal ignition conditions across parts of the UK. Rural and semi‑rural businesses - agriculture, hospitality, logistics, equestrian centres, storage yards - face heightened exposure.
Wildfires can damage buildings, vehicles, stock and fencing, but indirect losses are often more severe: smoke contamination, access restrictions, and prolonged business interruption.
What brokers should do:
Review fire protection measures with clients.
Discuss vegetation management and defensible space.
Ensure BI cover is adequate for wildfire‑related disruption.
Water‑Dependent Business Interruption
Many industries rely heavily on consistent water supply: manufacturing, food processing, utilities, construction, agriculture and cooling‑dependent operations. Drought conditions place these sectors under pressure, especially when regulatory restrictions or supply interruptions occur.
While drought itself is often excluded, indirect triggers may activate cover: machinery breakdown, utility failure, or supply‑chain disruption.
What brokers should do:
Identify clients with water‑critical operations.
Review BI extensions and explore any other options.
Discuss contingency planning for water restrictions.
Secondary Building Damage When Rain Finally Arrives
Dry, cracked masonry and compromised building envelopes can allow sudden rainfall to penetrate structures. After long dry spells, intense rain can cause internal damp, mould, timber decay and electrical issues.
Commercial buildings are particularly vulnerable when:
Ventilation systems are off (e.g. vacant properties).
Gutters and drainage systems are blocked.
External walls have developed thermal cracks during heatwaves.
Insurers may decline claims if damage is linked to poor maintenance rather than storm activity.
What brokers should do:
Encourage mid‑summer maintenance checks.
Advise clients to inspect drainage, ventilation and external walls.
Highlight the importance of documenting preventative action.
Supply Chain Disruption and Sector Specific Impacts
Drought affects more than property. It disrupts supply chains, reduces agricultural output, and impacts industries dependent on water, cooling or temperature‑controlled environments.
Key sectors facing pressure include:
Manufacturing: cooling system strain, machinery overheating.
Food & beverage: reduced crop yields, livestock stress.
Construction: dust hazards, reduced concrete curing efficiency.
Logistics: increased vehicle breakdowns during heatwaves.
Utilities: pressure on water and energy infrastructure.
What brokers should do:
Map client supply chains and identify drought‑related vulnerabilities.
Review BI cover for indirect losses.
Encourage clients to diversify suppliers where possible.
Underwriting Shifts: What Brokers Should Expect
Insurers are increasingly treating repeated drought and heatwave years as structural risks rather than isolated events. This is already influencing underwriting appetite and pricing.
Expect to see:
More detailed soil‑type and postcode‑level risk mapping.
Higher subsidence excesses.
Stricter acceptance criteria for older commercial buildings.
Greater focus on wildfire exposure.
Increased use of climate‑risk modelling during renewal.
Brokers who prepare clients early will reduce friction and improve outcomes.
What Brokers Should Be Doing Now
Conduct Mid‑Year Risk Reviews: Focus on structural movement, fire exposure, water dependency and supply‑chain vulnerabilities.
Prepare Clients for Renewal Scrutiny: Especially those in clay‑soil regions or rural areas.
Encourage Preventative Maintenance: Gutters, drainage, ventilation, external wall inspections, especially for low‑occupancy buildings.
Strengthen Insurer Relationships: Share anonymised client trends and demonstrate proactive risk management.
Communicate Early and Often: Clients need to understand that drought‑related risks are rising and insurers are pricing for recurrence.
Final Thought
This summer’s drought is not an isolated event; it’s part of a pattern reshaping commercial risk across the UK. For B2B insurance brokers, the opportunity lies in being proactive: identifying exposures early, guiding clients through preventative action, and preparing them for a market increasingly sensitive to climate‑driven losses.
Treat this dry spell as a strategic advisory moment. By doing so, you strengthen client relationships, reduce claims friction and position your brokerage as an essential partner in a changing risk landscape.
The Thread...
Insurance Support Solutions Ltd can provide specialist support to
Give you the time and capacity to stop and think
Manage your clients through this unique period of time and beyond as you compete for the big wins
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Ask us about what is involved, and we will work with you to provide a bespoke solution that gives you confidence and conviction to positively impact on the customer experience.
And finally…
Water shortage — “I tried to water my garden, but the hose filed a business interruption claim.
