Steve Wright, Head of Technical Services GHG Solutions
As we head toward the height of the summer, there is concern throughout the market as to whether or not the prolonged dry spell the country has experienced to date, will result in a spike in subsidence claims in areas prone to clay shrinkage. Should you be concerned at this stage or indeed start planning for a surge? What are the risks if you face if you don’t?
We posed these and other questions to Steve Wright, Head of Technical Services for GHG to gain his thoughts and opinion of what our clients should be doing now and how GHG can assist.
Taking the events of earlier in the year, namely storms Eunice and Franklin, Insurers received very little warning and the effects of these storms were instant, leaving thousands of policyholders requiring urgent assistance. Weather related surges require an immediate response to mitigate further damage and to keep indemnity spend in check.
In comparison, a Subsidence surge is generally as a result of an extended period of warm and dry spring weather that extends into the summer months, as witnessed during the summer of 2018. Whilst there will be an expected increase in claims volume, the nature and cause of the damage doesn’t generally warrant an emergency response, compared to wet peril events.
Critical to the effective management of a Subsidence surge is to ensure correct and accurate information is collected on the initial visit. Our Subsidence Specialists are accompanied by a site investigation team, which enables us to establish the cause of the damage, whether policy liability will engage and to provide reassurance and advice to policyholders.
By determining the correct cause and liability decision at Day 1, we can set the appropriate claim direction to ensure claim duration and indemnity spend are controlled.
We have been tracking rainfall data, published by the Environment Agency, since early January to assess the likely impact on the shrinkable clay soils. Whilst we appreciate no two surge years are exactly the same, we have been able to draw comparisons to previous years.
When comparing 2022 to previous years, the closest in terms of effects on the subsoil was 2018,although winter 2021 and spring 2022 have been much drier than comparable periods in 2017/2018. In addition, the MORECS (Meteorological Office Rainfall and Evaporation Calculation System) figure has doubled in the last month and now exceeds 250mm, well on the way to the maximum possible value of 308mm and has now aligned with that of 2018.
Considering this and the long-range weather forecast that suggests July and August will remain predominantly hot and dry, which will assist the further drying of the soil, I do believe this will result in a dramatic upturn in reported subsidence claims this summer.
The impact of warm weather and low rainfall is felt by the clay soils, which are predominantly located in Southeast England. As such, we do not usually see a nationwide impact. It is the dewatering effect of trees and other vegetation which causes the clay subsoil to shrink and for subsidence damage to occur to properties.
In terms of mitigation measures to reduce the likelihood of being affected by subsidence, we would suggest that homeowners regularly control vegetation in their ownership and by avoiding planting shrubs close to the house. Having shrubs in pots is a good alternative solution.
Whilst Subsidence surges are not common, most Insurers will have a plan to ensure they have the necessary expertise and resources required to respond which may include utilising the services of a number of experts such as Loss Adjusters, Subsidence Engineers, Soil Sampling providers, Building Contractors and a range of other services. In addition, preparing for a possible surge could also include a timely maildrop to their policyholders with guidance regarding maintenance of vegetation.
If an Insurer doesn’t have in place a contingency plan, including the necessary resources, it could result in unnecessary delays,increased costs, and increased customer dissatisfaction.
For any Insurer without such a plan or indeed any insurer currently in the process of reviewing their subsidence proposition, we would welcome the opportunity to discuss our full range of services and our unique approach to handling subsidence claims, which is significantly different to our competitors
In addition to tracking the MORECS data and looking at the possibility of a Subsidence Summer, we took the opportunity to review our Subsidence Operating model, introducing a number of significant enhancements to ensure we deliver a superior claims service, with significant reductions in indemnity spend. These enhancements included:
We have learnt where the potential issues are in terms of progressing subsidence claims through a busy summer and have inpace the necessary resource both internally and through our supply chain to ensure that there is sufficient capacity.
We stand ready to support any client that needs assistance during what may prove to be a busy few months.