With the UK experiencing all-time record temperatures in the last few months and warmer summers predicted to become commonplace – are property insurers equipped to handle the ongoing surge in subsidence risk?
A report by our data partner, software and technology company Dye & Durham in June found that more than 7.65 million properties in England and Wales could be exposed to high or medium risk of soil subsidence by the 2080s.
This is in addition to LV reporting a 205% rise in subsidence cases between June and July this year alone, with Sedgwick expecting claims to increase between 300% and 400% for August.
Founder and Chief Executive at Addresscloud, Mark Varley, says that if these concerning forecasts are correct, property insurers and their customers could be faced with significant cost increases, in addition to those they have already had to absorb in such turbulent market conditions:
“If the number of properties at risk increases, as Dye & Durham predicts, insurers may need to increase premiums. However, this predicted increase does not account for new builds during this time that may also be built in areas with a subsidence risk.
“Add to that, the fact that claims costs are rising steeply as labour and materials become increasingly costly, and insurers could be facing a perfect storm of increasing numbers and costs which will be passed on to customers.”
Graeme Trudgill, executive director at the British Insurance Brokers’ Association explains further down the piece that how the industry responds to the growing risk of subsidence will depend on how market capabilities develop in the coming years, especially in regards to data mapping and the use of technology at the point of underwriting – an area that we at Addresscloud specialise in.
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