Flood claims - Drainage Systems: When drains go bad

When floods hit the headlines, public attention is drawn to startling images of rivers bursting their banks. But there has been widespread recognition of the fact that rivers are one cause and that overflowing drains and sewers are also important contributory factors. Insurers are increasingly looking to research these wider issues, and there are legislative developments in the pipeline that seek to address drainage problems.

The floods which swept through Hull in 2007 put the spotlight on the potential significance of drains in extreme weather events. David Brewster, managing director of Auger, observes: "In Hull, the issue was very much drainage-related — with a lot of rainfall, the backing up of the pumping system and the entire city overflowed."

There are some statistics and anecdotal evidence to suggest that, in 2007, drainage issues accounted for a significant percentage of losses. According to Liz Couchman, senior product manager for RMS: "Damage caused by surface water and minor rivers — whether from a drain or on its way to a drain or river — on average contributed to 60% of the losses experienced by insurers during the 2007 flooding."

Poor drainage

However, it is important to note that the causes of flooding will vary by event. As Ms Couchman explains: "In certain events, this kind of flooding outside of major rivers will play a big part and 2007 was a wake up call. But in the Cumbria floods last year, this kind of flooding represented only a small percentage."

What is clear is that the impact of poor drainage must be taken into consideration. Alex Finch, managing director of national building services at Crawford & Company, points out that in some cases, incidents that would otherwise have been small and relatively insignificant can become major flood events because of drainage problems.

And insurers appear keen to get to grips with the issues. "We are seeing a desire from insurers to understand the full set of risks — from rivers to surface water. They know it is a risk and they are keen to understand how to quantify it," asserts Ms Couchman.

The quality of drains and sewers varies from one part of the country to another but a common theme that emerges is that the current infrastructure simply cannot cope with modern life.

As Richard Ayton-Robinson, business development director for Cunningham Lindsey's Oriel Services, says: "A lot of the infrastructure is 100 years old. The sewers were installed to take a fraction of the properties that now discharge into them."

Times have certainly changed since the sewer and drainage systems were first introduced into the UK, and both commercial and domestic developments are exacerbating the problems associated with flash floods and heavy rainfall. Industry professionals point to the rise of large shopping complexes and also trends in putting concrete and tarmac over gardens in order to create driveways, as contributory factors.

Mr Finch observes: "If you have a concrete hardstand at the front of your property instead of a small garden, then the water can't percolate into the soil. All that water will have to run off into the sewers — creating much more demand on the system."

Sustainable drainage systems may be one answer to this particular problem. Mr Ayton-Robinson says there are moves to put controls in place under building regulations, "to look at the way surfacing is installed and whether this will have a detrimental impact on the environment or at property level — and to look at measures that can be put in to allow permeability".

Stuart White, partner at Reynolds Porter Chamberlain, explains that the Flood and Water Management Bill, which is currently going through parliament, will address the issue of sustainable drainage.

The Bill is being hailed by many industry professionals as a very positive step in the right direction — and one that will help to address many of the key challenges. It was introduced into the House of Lords on 3 February and is a direct response to Sir Michael Pitt's review of the summer 2007 floods. This review identified clear gaps in the way that flood risk is managed, and brought attention to the issue of surface water flooding. Mr White asserts that the Bill is one of the most significant recent developments and adds that it should also help to clarify precisely who is responsible for flood defences and drainage problems.

Need for maintenance

However, the Bill is not a panacea and, as Philip Bird, director of claims at Groupama, observes, it appears to do little to address the current and urgent need for maintenance and repairs. He explains: "The Flood and Water Management Bill has a lot of good things in it when it comes to looking at future developments and controls around drainage. But until we see a sufficient pot of money being put aside to repair existing infrastructure, there are still questions."

Elaine Parkes, head of technical for Legal & General's general insurance business, adds: "The Bill is now at committee stage in the House of Lords and close to being enshrined into law." But she cautions that while the Bill requires the use of sustainable drainage systems in certain new developments, these changes will only affect new developments and are, therefore, only an answer for the long term. "In the short and medium term, improved mapping techniques are essential for insurers in order to help them manage risk effectively," she asserts.

A continued commitment on the part of the insurance industry to invest in researching the causes of flooding should pay dividends. Simon Black, head of flood mapping at Aviva, asserts: "We are always looking at ways to enhance our understanding of flood risk and our flood map technology is a key component of that."

As far as drainage issues are concerned in particular, Mr Black explains: "Of course, we are always looking at ways in which we can model surface water flooding and the issues that poor drainage, or just overwhelmed drainage systems, can cause for homes and businesses when freak rain events occur. This is all part of our ongoing work in this area and we believe this is absolutely worthwhile considering the kind of damage we saw to homes and business in Hull in 2007 and Cockermouth in 2009 — mainly due to poor drainage systems and the knock-on effects of surface water flooding."

Since 2001, RMS has been modeling the factors related to flooding outside of the major flood plains. Ms Couchman is enthusiastic about recent developments: "We had a major upgrade to our models in 2008. These new models specifically define which areas are affected by the major river flooding and which areas are susceptible to smaller rivers, as well as the groundwater and surface water elements."

The data being gathered on past and current claims will also contribute to the research and development of risk management solutions. Mr Finch asserts: "It's a question of building up our knowledge base. For example, we've got a pretty extensive databank around our claims experience and we are working on building that. We are able to say we've dealt with flood claims in certain areas and that a certain percent has been as a result of the drainage system."

Unpredictable causes

Some causes of flooding are still emerging and remain unpredictable but others are becoming easier to forecast. Peter Adlington, property and commercial reinsurance manager for Allianz Commercial, observes that cost-cutting on urban street cleaning and a modern trend among farmers to cut hedges and leave the residue to rot, rather than the traditional combination of hedging and ditching, is a major cause of localised flood incidents.

"These are random, cannot be predicted and will remain a pricing factor as part of normal attritional claims," observes Mr Adlington. As far as more predictable factors are concerned, he again points to issues such as tarmacing: "Other such flooding is a direct result of local topography, old or failing ground water drainage or tarmacing of permeable ground to name a few. These give rise to a more stable experience which, coupled with recognisable physical features, make the prediction of further events at these sites, and at others that display the same features, a reality."

Another useful development in terms of managing problem drains has been the emergence of specialist claims handling companies. As Steve Watkins, chief executive of Independent Inspections and Ansa, observes: "The [drainage] market has changed massively compared to a decade ago. There is now much more professionalism and this has resulted in cost reductions and efficiencies for insurers. There is a much more consistent approach across claims handling now." He adds that modern techniques and technology have brought faster solutions and less disruption for the policyholder.

Mr Bird agrees that new technology and the rise of specialist drainage experts have helped where individual claims are concerned but he draws a distinction between the claims related to repairs for individual drains and those related to widespread flooding. "The claims that have really had an impact are the flood claims. Repairs to the drains are important but the real cost issue is once the water comes to the surface."

Asked to identify significant improvements in drainage claims handling over the past decade, many point in particular to the Drainage Protocol. Simon Fry, technical surveying manager for CRB Services, says shared drainage claims have become a lot easier since the introduction of the protocol. Highlighting the main benefits, he explains: "In the past, if 20 houses were involved, you'd have to get agreement from each of those 20 different houses. But now a lead loss adjuster would approve the project and advise the 20 insurers what their apportioned costs would be. So the Drainage Protocol has certainly helped."

Despite recent developments and the prospect of greater legislation on drainage, there remain significant challenges ahead. Mr Brewster emphasises a potential 'drainage timebomb' in the form of pitch fibre pipe work which was laid across large parts of the country in the 1950s and 1960s. He explains: "This distorts very easily, and also foul and the detergents put down the drains blister it and rot it over time. This drainage is reaching the end of its useful life and while it is no longer used for new pipes, there are many kilometres of it underneath the ground."

According to Mr Brewster, a number of major insurance companies are excluding this from their policies and are also contesting claims involving pitch fibre. "There are a number of rulings currently with the ombudsman," he observes.

Mr Fry agrees that pitch fibre pipes are a major bone of contention currently and adds he is aware of insurers having repeatedly repudiated claims associated with pitch fibre, although many have been overruled by the ombudsman. "When the owner buys a property, they would expect the drainage pipes to be working and also, given that it is underground, you can't physically see it getting worse," explains Mr Fry.

Drainage is, of course, just one part of the flooding problem but industry professionals are hoping that legislative developments and the ongoing research into drains and sewers will play a vital part in alleviating the impact of floods in the future.