The ups & downs of Subsidence

There has been much debate over whether 2003 should be called a subsidence 'event' year, so much so that it's detracting from the more important issues. Forget what it should be called for a moment and examine the facts:

In the first half of the year, incoming claims were around 8% lower than in 2002. Hot dry weather then caused a marked upturn in notifications during late summer and autumn. Early October saw the peak, when numbers averaged four times typical 2002 levels nationally, and it had a regional focus that was greatest in the South East

Subsidence notifications overall for 2003 were around 70% up on 2002. This increase as a percentage was not as large as the last 'event' in 1995, but the underlying growth of the market since then means that 2003 saw more actual notifications than 1995

Because dry weather increases the number of valid claims and instances of significant damage, the uplift in claim costs will exceed the uplift in numbers.

Should 2003 be called an 'event' year? Isn't this really just semantics? Weather-related peaks and troughs are in the nature of subsidence. We've just been in a trough and now we are moving to another peak - nothing new here. It's more important to look ahead to this year and beyond. First, to ensure that the claims received are progressed to a satisfactory conclusion and second, in the knowledge that 2003 cannot be viewed in isolation. Past experience demonstrates that if dry conditions should continue, claim levels in 2004 would also be high, possibly higher than 2003. Therefore the true size and extent of the current upturn will not be known for some time.

Planning aheadWe live in a consumer culture and service matters. Every subsidence provider will say surge plans have been activated, but successful planning goes beyond first visits. Planning must cater for the whole claim and focus on what the policyholder wants most - an early and effective repair. This means open book planning with supplier partners, including specialist repair networks, and real pooling of skills and knowledge. Clear communication with the policyholders is also essential. We would do well to remember that, for a policyholder, any year that includes a subsidence claim is an event year. Companies that commit resources to better communications will see the benefits when the pressure is on. Service must be combined with firm control on spending. What has driven the insurance attitude to subsidence since the last "event" is not so much preparation for the next peak, but the need to reduce costs while matching higher policyholder expectations. The smart service providers can learn from claim peaks. The increased pressure and focus can be used to drive further process improvements, cut out waste and improve efficiency. Service and spending aren't just about controlling costs once claims are notified - we need to reduce invalid notifications that arise from publicity about a 'surge' or 'event'. This means more and better information to policyholders as to what does and does not constitute subsidence - and that is information from both the industry and in the media. Most cases of dry weather subsidence damage are caused by trees that are growing too close to buildings. At some point the cost of prevention will exceed the cost of the claims prevented, but we haven't reached this point yet - more can be done. More pressure should also be applied to plans for new housing so that these problems are not just stored up for the years ahead. The industry's expertise in putting things right can be useful in helping to identify the types of building and the locations that society needs for the future. Summing up, the current upturn in claims is nothing new - we'll always get the peaks and the troughs, but as an industry we should look to exercise more control over the underlying trends as well as the size of the peaks when they come along. Surely the future involves a service that actively manages property portfolios before "events" (or surges or whatever we decide to call them) as well as the increase in claims when they arise.

Nigel Barham is part of Cunningham Lindsey's senior management team for project managed subsidence