The effect of this year’s heatwave will reach beyond a bit sunburn with a subsidence surge year and a rise in insurance claims predicted.
So far this year, the UK has seen long dry spells of weather and it looks like it could be another subsidence surge year with the associated rise in insurance claims.
The industry needs to ready itself, is the message coming from the Association of Specialist Underpinning Contractors (Asuc) executive director Rob Withers.
“This year is going to a surge year for subsidence after the hot and dry weather, and with little rainfall, all the indicators are there,” says Withers. “Subsidence has become something of a forgotten peril on the insurance radar until this year where it will be back to the top of the agenda.”
In the past 42 years, there have been eight surge events. Starting with the infamous summer of 1976, then 1985, 1990, 1992, 1995, 1996, 2003, 2006 and now 2018.
According to Asuc, individual surge years are characterised when there are more than 50,000 subsidence claims. Since 1976 repair bills have exceeded £400M a surge year, totalling £14bn.
However, numbers have dwindled over the last 10 years, with just 16,000 claims per year with a cost of around £60M in total.
“Only around 5% of insurance claims result in underpinning,” says Withers. “The other 95% usually involve tree removal, pruning and maybe some sort of structural repair.
“What will be interesting this year is whether that 5% will still be an accurate figure, or whether we will see some of those repairs from the last decade beginning to fail and an increase in underpinning.
“Anecdotally, I have been told that claims are up by 400% already,” warns Withers. “I wonder if we will see a doubling of underpinning to 10%.”
The insurance market is already bracing itself for an increase in claims, according to Withers, and “dusting off“ surge plans to begin to deal with the influx and still meet service levels for customers.
Anecdotally, I have been told that claims are up by 400% already
Former Subsidence Forum chair and independent consultant Iain MacLean agrees: “I have already been contacted by five insurance companies in the past two weeks asking if I can work for them.”
Withers foresees that having enough experienced and qualified staff is going to prove tricky. “The difficulty is that many suppliers are signed up to a number of insurers and any surge plan call for extra staff is going to be stretch them,” he says.
“Many experienced people a decade ago will have moved on to other things so I think we are going to see some inexperienced staff dealing with the initial claims and that will create its own set of challenges.”
MacLean adds: “We have probably lost up to 50% of experienced people in the past 10 years and, if we do get a surge year – and I’m 98% sure we will – then we need to remember there will be a big deficit.
“In the insurance industry, they can’t hang on to engineers and surveyors they don’t need when the claim numbers are down. Staff are disillusioned about being overworked and then being made redundant,” says MacLean.
“Some of the cases that I see are unbelievably bad. It’s the inexperience of staff. The insurance companies put the work out to loss adjusters and claims management companies and rely on their expertise. And equally, the insurance claim handlers inhouse do not have the knowledge to read the reports correctly. They have lost the expertise too.
“There has been a streamlining of the process by insurers and inevitably a dumbing down.”
The advances in technology in the past 10 years could be an advantage though.
In the insurance industry, they can’t hang on to engineers and surveyors they don’t need when the claim numbers are down. Staff are disillusioned about being overworked and then being made redundant
“There is no reason why a less experienced person couldn’t use video links, drone footage, facetime, Skype to go and film the problems at the property and relay that back to a more qualified and experienced office-based person,” suggests Withers.
“There is a risk that a less competent person might not know what to look for and miss something a competent and experienced person would see and note.”
Over that last 10 to 15 years insurers have grown used to not having to underpin properties, according to Withers. “Arguably the most expensive repair solution, insurers are instead removing the offending cause, often trees in a clay subsoil, or repairing drains in a granular sub soil and ‘making do’ with superficial repairs,” he says.
“Even this approach used to involve structural repairs with brick reinforcement for example, but that has been ‘dumbed down’ to filling and painting only.”
Current Subsidence Forum chair Mark Scobie agrees there has beben a reduction in the number of properties being underpinned, btut points out that it is not a ’fix all’slution: ”15 years or so ago, many insurance companies and loss adjusters would mitigate against the cause by partially underpinning the property in the area of damage. However they quickly realised that whilst this stabilised the area of damage, it potentially had a knock-on effect to the rest of the property that remained on its original foundation with no further underpinning due to differential movement.
“Stabilising using a piled solution would not create a barrier to roots and they would continue to grow beneath the structure thereby reaching the area of the property not protected by the works. As such, mitigating against the cause in the form of tree management or drain repairs deemed to be a better approach and safe-guarded not only the part of the property that was showing subsidence damage but also the rest of the property from potential damage in the future.”
Tellingly, a number of Asuc members have withdrawn from the market as the association was unable to offer its latent defects insurance as the risk of recurrence was too high for its insurers.
“The risk this year for insurers, particularly those on fixed price indemnity models, is that those superficial repairs fail and a more substantial repair including underpinning is required. This will be expensive in cost and damage customer confidence in what was done before,” argues Withers.
But there is some light for the profession. As most subsidence claims take around 12 to 18 months to investigate, diagnose repair and settle, the repairs and underpinning is some way down the line following initial loss adjustor visits, site investigations, agreeing schedules, pricing and then finally carry out the works.
“Underpinning contractors will have a longer period to gear up for the work,” explains Withers. “We’ll have longer to get prepared for how many claims they will be, longer than the other professions.”
But could a change in foundation design for housing make them subsidence proof and mitigate the urgency of a surge year? Withers believes it could.
Asuc has been working with the Subsidence Group for a number of years, and more recently with The Trees and Design Action Group (TDAG) – made up of professionals and organisations increasing awareness of the role of trees in the built environment.
Withers explains: “TDAG’s focus is on providing much needed tree planting for the environment is against a background of insurers wanting to fell trees because of subsidence problems. Add in local authorities with Tree Preservation Orders and we need to work together to manage how to plant trees and cope with foundation issues.
TDAG’s national coordinator Sue James agrees: ”We all need to be singing from the same hymn sheet. It’s the future planning.”
“We need to use what we have learnt. We know what the pitfall are and what kinds of foundation tend to fail,” adds Withers.
“The National House-Building Council guidance on foundations is, in our view, dated and needs updating to address health and safety concerns, as well as the changing cost of engineered foundations. We consider that 2.5m or less for trench fill is still dangerous for the health and safety of the operatives.”
Asuc is campaigning for depth calculators to be used more widely and they can prove there is a need for engineered foundations from 1.5m. “In fact, we can demonstrate that and at depths of 1.5m to 1.75m a piled foundation system can be more cost effective than trench fill,” says Withers.
“It’s good for the environment, less muck away, less concrete, fewer lorries on the road.
“Where work is needed, is where the industry has got itself stuck in trench fill mode as the easy option with house builders and developers.”
Asuc is slowly breaking the mould and members are able to offer piled systems that include a ground floor slab, insitu or pre-cast concrete, ready to build from, with a foundation insurance guarantee.
“There is a rub between the insurance industry, the tree planting groups and where we fit in,” says Withers. “If there is a claim involving a tree, the insurance industry will want that tree trimmed or removed; the tree planting group will want to keep it in and plant further trees; and we know we can provide foundations if tree planting is planned. And we can do that as cost effectively as trench fill in most circumstances, says Withers.
James agrees: ”If the Victorians had built houses on piled foundations, to accommodate tree roots, then we be might be seeing less subisidence issues now. And whilst we need to provide housing for people, we have a responsibility to make places for people, and to future proof those homes.”
Withers believes that it is possible to future proof homes with a piled foundation: “We know that piled solution is cost effective, safer and can complement the tree planting requirements. If we are ever to build the 250,000 to 300,000 houses a year the government is calling for, this is the perfect starting point and to prevent further surge years.
“We can plan for the influx of work for underpinning contractor next year as the insurance claims are settled. But what would kick it off big time is if 2019 is another surge year.”