Drought conditions and heavy rainfall both impact on damage caused by drainage systems. Nigel Blacow details industry developments aimed at tackling this problem
Drainage is an increasingly important issue for insurers as the early effects of climate change appear to be manifesting themselves in a growing number of unpredictable and extreme weather events.
In drought conditions there is increased root growth and ground movement, both of which increase damage to, and leakage from, drains. This results in greater foundation subsidence, of which approximately 20% is related to drainage problems. Equally, during high rainfall and flooding, the adequacy and condition of existing drainage plays a critical part in determining the extent of any property damage. And following a flooding incident, drains need to be cleared or repaired promptly to prevent ongoing or repeat problems. Consequently, it is vital insurers continue to focus on these issues and how best to ameliorate the effects of drainage problems in both scenarios.
Cost-effective resolutions depend on the prompt, independent and intelligent investigation of affected drains - the difference between insurers that have appropriate specialist supplier arrangements in place to manage swift, accurate diagnosis and proper repair and those who do not could be measured in millions of pounds.
This summer's drought has also brought to the fore leakage from underground water pipes, with close media attention being paid to the massive waste from the ageing mains that the water companies hold responsibility for.
However, individual house owners are legally responsible for the maintenance of the domestic water service pipe on their land - that is, from the water company valve, normally in the public footpath, to the internal stop tap - and, therefore, have a similar duty to minimise leakage. For their part, insurers have a liability under the "accidental damage to underground services" peril of a policy for this section of underground water pipe.
It is, therefore, important that any leakage is resolved promptly to reduce the risk of further damage to surrounding property. For example, paths, patios and drives can be rapidly undermined and ruined by leakage from a water service and even the property itself is vulnerable to possible subsidence if escaping water either washes away or softens the ground close to the foundations.
Many insurers are developing strategies for these water services with specialist suppliers to get early control of any claims. These are designed to bring about swift action to stop the leak (and waste of valuable water), reduce the risk of 'cowboy' contractors exploiting the situation, and provide a more customer-friendly service.
Since the Insurance Drainage Forum held its inaugural meeting in September 2002, the insurance industry has made progress in the way it handles drainage and water service claims. During the past four years, almost all major, and many smaller, insurers have shifted away from loss-adjuster-led drainage claims to a solution involving specialist suppliers operating on a national basis.
By ensuring that these suppliers investigate, scope and repair in accordance with the Drain Repair Book (developed jointly by the Drainage Forum and WRc, formerly the Water Research Centre), insurers have introduced their own form of regulation and achieved significant savings while improving quality and customer satisfaction. Many 'switched on' insurers have also developed their drainage claims-handling philosophy.
As a result of these initiatives, the reduction in overall spend by insurers on drainage is estimated to be approaching £40m of an annual spend conservatively estimated to be more than £100m.
Capacity is a risk for insurers due to the limited number of specialist suppliers that can provide a compliant service. On the other hand, because a high proportion of insurance drainage work is channelled through these suppliers, insurers have managed to reduce their exposure to the cowboys and all the problems that entailed. Material suppliers have confirmed that the number of drainage contractors in the domestic insurance market has dropped dramatically, with the demise of many small operators - some good, some poor and some very poor.
However, insurers must not become complacent - large advances still need to be made through enhanced co-operation between insurers and their suppliers. The Drainage Forum has produced a protocol giving guidance in the difficult area of investigation and repair of shared private sewers.
This protocol should reduce costs to insurers and provide a much less confusing and quicker resolution to customers. This is also linked to the problem of pitch fibre pipes - whether these should be covered and, if so, how they should be repaired. As it stands, pitch fibre pipe repairs are costing the insurance industry many millions of pounds per year but they are the subject of a major research project by WRc that is looking more closely at why these pipes fail and the most appropriate repair methods. Partly funded by insurers, this project should assist in the ongoing dialogue with the Financial Ombudsman Service regarding how these claims should be dealt with under the accidental damage peril.
Another glimmer of hope for insurers lies in the fact that the government may yet decide to transfer responsibility for shared sewers to the Sewerage Undertakers, which would be welcomed as these represent a shared headache for homeowners. However, the decision is being drawn out and, even if the government makes a decision this year, it is unlikely the transfer will take place before 2010.
Another area where insurers should take the lead is in the development of innovative and better quality repair methods, including use of the ever-evolving trenchless technology, which reduces disruption to the customer. The drainage industry is also moving to digital CCTV systems, which should further improve the speed and quality of investigations. Insurers should be driving these, and other, improvements that will not only benefit the drainage and insurance industries but, more importantly, their customers.
Nigel Blacow is technical director at Ansa
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