Concerned about your property damage claims portfolio?
We understand the current issues affecting insurers, brokers, property developers, property owners, as well as residential and commercial landlords within the property damage space.
Escape of Water
Escape of water claims are consistently the most expensive for insurers, with the number and cost of these claims rising. The Association of British Insurers believes that members pay out approximately £2.5m every day on escape of water claims. In 2018, the ABI say that the industry dealt with 287,000 EoW claims at a cost of £950m.
A high number of these claims, both domestic and commercial, have been found to be fraudulent. IFIC Forensics have estimated that “EoW claims represent approximately a one in eight fraud opportunity”.
COVID-19 and Property Claims
The COVID-19 pandemic continues to cause unprecedented disruption to businesses and has seen widespread disquiet for insurers faced with challenges to cover interpretation and criticism of their response. Our team of experts have written a blog detailing these concerns and how they can help. Click here to read it.
The ABI suggest that fire is one of the most expensive categories of property insurance claims, with £1.3 billion being paid out to customers during 2018.
There have been a number of significant, high-value claims in recent years regarding timber frame-constructed properties. We expect to see more if the government and the market continue to see timber framed construction as a solution to the housing crisis.
Insurers will need to adapt accordingly, as this method of construction poses a particular fire risk, given the presence of cavities within the finished structure, both during construction and thereafter.
Legal & General suggest that the average cost of flood damage to a home is calculated to be £30,000. Dealing with repairs during the social distancing restrictions required by COVID is likely to increase costs for insurers.
The impact of extreme weather events on businesses will exacerbate an already difficult time for insurers, home owners and businesses alike. Damage to homes and businesses across the UK has been extensive in recent times and property insurers are now beginning to count the cost of their exposure arising from these extreme weather events.
Flood Re reported that for their financial year 2019/20 they incurred claims at a gross cost of £160million - ten times higher than the previous year - in the wake of Storms Ciara and Dennis. Climate change is making storm and flooding events both more frequent and more devastating, meaning we could be on course for further costly years for insurers in respect of flood claims.
Looking to the future, extreme weather events only seem likely to increase. Flood Re’s research suggests that if climate change is proceeding on a two degree Celsius line then by 2039 the number of homes at risk of flooding will have increased by nearly 30%. Insurers also need to be alive to the fact that the increased financial distress caused to businesses and individuals by COVID-19 may serve as a driver for fraudulent activity.
How BLM can help
Our property damage dispute resolution practice is one of the biggest names in the property sector. We have a well-established and respected team that has vast experience advising some of the UK’s largest insurers, specialist Lloyd’s underwriters and corporates within the property sector on all types of property damage claims, on issues such as:
We also have dedicated in-house fraud experts, technology, advanced analytics and intelligence resources which offer insight and assistance to both aid prevention and identification of all property damage fraudulent claims. Read more about our tools, Foresight and Fraud Edge.
In addition, the team have considerable experience of managing bulk low-value property damage and liability claims recovery schemes and operate highly efficient subrogated recovery schemes for a large number of insurers and corporate policyholders.
To find out more and how we can help, contact the team opposite.