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Subsidence View - May 2017

Subsidence View: May 2017

Welcome to the first "Subsidence View" for 2017. In this issue we take a retrospective look at subsidence numbers in 2016 and take an early look at what 2017 has in store.
Last year?– 2016 was generally regarded as a "near miss" in terms of a large uplift in subsidence claim numbers. Subsidence numbers in q4 increased by 24% compared to q2 according to recently published "draft" ABI figures, although the Subsidence Forum October Conference reported industry wide weekly instructions during September and October had increased by 70% for some insurers compared to the January to August average. Unusually, damage was quite localised in the south east, perhaps explained by the Met Office rainfall statistics which showed the clay soil areas of the south east had been much drier – remember the "absolute drought" recorded in August - than other areas of the country which also have clay soils.
Table: Met Office Precipitation Data (2016 versus 1961-1990 average)
South East England
Central England
North East England
South West England
But low rainfall is just one of the ingredients. The numerous mini heatwaves - with temperatures peaking at a sweltering 34.4 degrees in Gravesend, Kent - was the other key factor. Accordingly, some insurers with large exposure in the south east received an uplift in claim numbers during September and October, whereas others saw little change to their normal loss levels. And it could have been worse - looking back to the early summer, rainfall in June was 212% of average in the south east - which helped to avoid a much more significant claims uplift.
So what of 2017?– The winter was "rather dry and mild" according to the Met Office review, with the majority of the country experiencing below average rainfall:
  • The Met Office are continuing their recent strategy of limiting their forecasts to 30 days ahead and comment as follows: "as we move into the first week of May, we're expecting more settled weather to become established, with temperatures rising significantly giving us a warm week, perhaps very warm in some parts. The dry and settled weather is likely to last to the end of this period"
It is now 11 years since the UK insurance industry experienced a significant and costly surge of subsidence claims, so could 2017 be the next one? The surge of 2003 actually followed a prolonged wet and cold winter, whereas other dry winters have been followed by summers which have yielded much lower claim numbers. What we do know is that:
  • an extended period of exceptionally hot, dry weather between June and September will be the deciding factor.
  • the surge of 2006 followed a dry and mild winter similar to 2017 with new claim instructions peaking in July, which was unusually early. So following the dry winter, it will be very important for insurers to monitor the situation closely and be prepared for the risk of an early uplift.
Our next edition of Subsidence View will include our first look at the MORECS measure of soil moisture deficit, plus an update on the likely subsidence surge risk for 2017.
If you would like to talk to us about how Building Validation Solutions can help with your subsidence surge plan or improve you approach to subsidence claims generally, please contact Giles Carter on