THAT SINKING FEELING
In the aftermath of the summer heatwave, the UK’s property insurers are holding their breath to see if subsidence will result in a wave of claims
Insurers are watching and waiting to see if an expected surge in subsidence claims follows the UK’s long, hot and dry summer.
A maximum temperature of 33.2°C was recorded at Kew Gardens (greater London) on 3 August, which followed the result in a wave third-warmest June on record and the of claims second-warmest July. The Met Office was saying, as summer drew to a close, that it was very likely to be among the hottest summers on record, vying for that accolade with 1976.
The bad news for insurers, however, is that it looks like it could be another subsidence surge year, with an associated rise in insurance claims.
Rob Withers, executive director of the Association of Specialist Underpinning Contractors, has already been warning that the industry needs to ready itself.
He says: “Subsidence has become something of a forgotten peril on the insurance radar until this year, when it will be back to the top of the agenda.”
However, it is only now that the claims might start emerging. According to the FT, Kate Syred, managing director of household and partnerships at insurer Direct Line, has warned that September is the critical month for subsidence claims.
She adds that, even once movement has been noticed, the cost is not immediately clear. “You start to observe the property and ask if it is still moving,” she explains.
Insurers face an average cost of £13,000 per subsidence claim, according to some, and the Association of British Insurers revamped its guidelines to the industry in December last year.
It has already been a bad year for weather-related claims – the ‘beast from the east’ in February and March caused pipes and water tanks to freeze and crack, while a jump in leak claims in 2016 and 2017 has helped to push up the price of home insurance.
According to the AA, the cost of the average combined buildings and contents insurance policy rose by 4% in the 12 months to the end of June, to £163. The cost of buildings insurance has been rising more quickly than the cost of contents cover.
Bad news then that, according to Sedgwick and based on the company’s weekly update on current subsidence volumes, there was a rise of more than 350% in the summer weeks and, as The Journal goes to press, the Indian summer continues with dry and unseasonably warm weather – expected to continue to affect already dangerously dry soil conditions.
Data from the UK’s Meteorological Office Rainfall and Evaporation Calculation System (MORECS) shows the biggest changes for several years, as the effect of the prolonged dry, sunny weather has started to show in monitoring readings.
MORECS readings increased sharply from June through mid-August, rising from less than 100, to 302.5. Although dropping slightly to the current 298.5 last week, it is anticipated that the maximum value of 308 will be reached within the next two weeks.
With warm weather patterns forecast to continue, especially in southern areas of the UK, Sedgwick estimates that
claim volumes will continue to rise and the company remains watchful of the situation.
“With live remote crack monitoring in place, feeding back data every eight hours, we are able to anticipate claim volumes before they occur, along with tracking soil conditions, level monitoring readings and long-term weather forecasts.
We also have collated soil samples and weather information to help predict likely claims volumes for this year,” says Kevin Williams, Sedgwick head of subsidence.
Looking at the previous surge years of 2003 and 2006, the current position shows that the soil is drier than it was in 2003, but not quite as dry as the surge of 2006. A surge event is dependent on how long the MORECS remains at this maximum level: in 2003 there were maximum readings for seven consecutive weeks; and in 2006 for four weeks.
With the warm and dry weather continuing into the autumn and even late-October, 2018 has been declared by claims experts as a subsidence surge year and loss adjusters are implementing plans to resource the incoming claim volumes, according to reports.
For once, insurers may be glad to see the start of the autumn storm season.
THE PROBLEM WITH SUBSIDENCE
● Subsidence is mainly a problem in areas with clays oil
– notably south of an imaginary line between Bristol and Hull.
● The main areas affected are London and the south east, but even in this part of the country, only one in 50 houses has suffered subsidence problems in the past 30 years.
● Subsidence is caused when a building’s foundations sink because the soil is unstable. Contributory factors are clay soil, vegetation that draws water from the soil, and leaking drains.
● ‘Heave’, on the other hand, is when the grounds wells because of increased moisture, causing the foundations to rise.
Source: Direct Line
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