Supporting structure

Many brokers may not know the significance of subsidence claims, but that is why the Subsidence Forum recently met Biba to discuss how it can effectively support the broking community.

Last week Biba's Peter Staddon, David Meur and Steve Foulsham played host to forum chairman, John Parvin and vice-chair, Rob Withers to investigate the issue of subsidence.

As a result, Biba members will be invited to the forum's training events and both parties have agreed to work together to ensure subsidence claims are handled as effectively as possible.

Parvin, who is also subsidence claims man- ager at Zurich, says: "The forum is currently looking to develop a risk guidance document for brokers and insurers, which they can then pass on to their customers."

Key topics for inclusion in the document are the essential maintenance of drainage and water pipes, to prevent potentially damaging long-term water leaks.

Also to be included are the needs of those owning properties that are located on clay sub-soils, to ensure they have the correct information to manage trees and general vegetation.

"This will help enhance the customer's claims experience, ensure brokers manage their customer's expectations and keep them up-to-date with various techniques and processes," says Parvin.

The forum's innovation register will be used to work up the document as it provides details on a range of possible customer solutions including soil databases, airborne mapping and satellite measurement of clay swelling.

As brokers need to be aware that subsidence is an expensive problem, and ranked by the ABI as the second-biggest risk after fire. In 2005, 37,100 people claimed £225m in subsidence claims on their buildings insurance.

That said, subsidence claims are not as bad as some statistics would suggest, says Parvin. "The ABI's subsidence figures over the past 14 years show that although there's an underlying trend for an increase in the number of notifications, the average cost of claims has in real terms continued to drop," he says.

The increase in notifications is probably due to a greater public awareness of subsidence but also a possible misunderstanding of 'tell-tale' signs - which suggests that as soon as a customer sees a crack in his property he contacts his insurer.

Most insurers now operate a project-managed service, which involves sending an expert to review the damage and diagnose the exact cause and recommend the appropriate remedial action.

Parvin says: "The average number of subsidence claims repudiated in a normal year will be between 60%-70% which demonstrates that the majority of damage is related to another cause such as thermal movement, wall corrosion, roof spread, shrinkage or lateral restraint."

The worst year as far as subsidence claims were concerned was in 1990/91 with costs in excess of £500m. Over the past 14 years the cost has varied annually between £125m and £450m.

The average claim can be quoted in many different ways, but according to ABI figures this varies between £4,000 and £9,000.

Biba considers that the forum will provide an invaluable source of information for members and is pleased that its members will be invited to the forum's training events during 2007.

Peter Staddon, who is Biba's technical services manager, says: "Anyone with first hand experience of subsidence claims will know how costly and traumatic they can be. It's important to embrace technical innovation in the handling of these claims in order to ensure speedy settlements and provide cost savings for insurers.

"The forum provides an invaluable source of information for members and I'm delighted our members will be invited to the forum's training events this year."

Parvin adds: "It's vital we work with Biba more closely. This will ensure direct contact can be made with brokers and customers."

Parvin also says the forum's "customer charter" could assist brokers handling subsidence claims. He says: "The charter provides details of what customers should expect when making a claim and for future reference."

And when it comes to the worst areas of the country affected by subsidence it can be problematic to indicate which area suffers the most. This is because it depends on how the data is reviewed and assessed.

In years with higher than normal claims, then the areas of the country most vulnerable are those where there is highly shrinkable clay subsoil.

"However, it is not as simple as considering just the ground conditions as many factors need to be taken into account such as prox- imity and type of vegetation, condition and proximity of drains, the age of the property, the type of foundations/construction and the layout and shape of the buildings," says Parvin.

Therefore, in general terms more claims are normally experienced in London and the South East.

One underwriter at Lloyd's says the industry has learned a great deal about this menace in recent years.

"We haven't seen an increase in subsidence claims because as an industry we have become a lot smarter at handling them and giving clients better advice on how to deal with the issue," he says. IT

To view 'Subsidence Claims By Numbers' click here .