The Future of Subsidence: From 1976 to 2036.

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(Earlier in my career, I specialised in the management of subsidence claims, that is, claims to domestic properties as a result of ground movement. I have always retained an interest. This is an article I submitted to a specialist group CRG.)

The past months of blistering heat in the UK have resulted in comparison with the summer of 1976 over 40 years ago, which set off a time bomb of domestic subsidence claims and spawned a completely new industry. There’s an inevitable temptation to draw parallels between then and now, and especially how the management of subsidence claims has evolved – but we should resist that and look forward!

But first – let’s enjoy the guilty pleasure of a brief glimpse over our shoulder, and look at the past.

Some might argue that overall there hasn’t been much change other than perhaps the proactive approach by insurers to take over the management of the subsidence claim. In retrospect this was a great improvement to the earlier approach where the burden rested on the homeowner to appoint an engineer, ‘prove the claim’, obtain estimates and the like.  It was an approach which mirrored the motor claims industry and subsequently was imitated by the management of flooding and other perils. But other than that, has there really been that much change?

It’s impossible to predict how subsidence will be managed in the next 40 years which would be mainly guesswork, but perhaps it’s not unreasonable to roll the clock forward just 16 years.

We already see some key trends emerging:

1. The gradual impact of global warming, showing itself both in blistering summers and flash floods
2. Greater use of data and analytics, allowing greater understanding
3. An increased movement towards proactivity by insurers in the claims process
4. Heightened customer awareness of their entitlement under the policy, and the level of service which they might expect

We can’t do too much about the first trend, that of climate change, even if some suggest that there may be some steps we can take to slow the process down. Let’s focus therefore on the other three.

Analytics Drives New Practices

The science of data and application of advanced analytics is certain not only to continue to mature, but to accelerate. Better and faster tools will be used for prediction with rules-based processes increasingly being adopted. Data and analytics provide greater insight into what is happening, what will happen, and what action should be taken. Ultimately this will inevitably lead to new business models for the handling of subsidence being developed in the form of new best practices and possibly also new forms of policy wording.

These new ‘data driven’ best practices will open the door to more effective claims management, probably with larger numbers of claims being managed remotely by fewer specialists.

The increased use of remote devices for monitoring, image collection and diagnosis will increasingly reduce the need for human onsite intervention – a process many might see as being especially attractive in these Covid times. Human intervention between the insurer / adjuster and the policyholder will dramatically reduce as chatbots manage inbound telephone calls and respond to other forms of communication.

Even in a claims surge, the entire industry (excluding repairers) might only need a couple of dozen people at best. These experts would be supplied by only one or two companies who would continue to collect data and gain greater insight. With accumulated data and continually improved insight, these companies will constantly refine their process, lower their costs and become more profitable.  They are likely to become, in supply chain parlance, ‘category killers’.

Onsite intervention and repair will also continue to evolve. Low-intrusion repair processes will become the normality, rapidly implemented with minimal disruption. After all, nobody really ever wanted builders working on their properties for months on end. In 16 years’ time, we will consider earlier subsidence repair processes to be primitive.

Predicting and Acting on Subsidence

Perhaps a bigger step will be how the industry applies analytical insight, in the context of proactivity, by placing a greater burden on the homeowner to take preventative action to avoid damage occurring.  The problem of prediction is already recognised. Variations between tree types and sizes, soils and building construction all add complication upon complication for exact prediction. But does the industry really need to pursue infallibility and absolute certainty in the prediction process?

After all, when we check the weather forecast which tells us that there is a probability of 60% rainfall, it doesn’t imply that rain will be 60% of ‘normal’ rainfall. Or even that it will rain for 60% of the day. All that it is saying is that on 60% of days with conditions like this, there was rainfall. Prediction is no more than a statistical construct. There is no certainty that rainfall (or subsidence damage) will happen, only a probability.

The creation of an industry-accepted prediction threshold to provide a likely ‘future damage indicator’ could open the door to a new approach to proactivity, reducing the number of new claims. This would especially focus on tree management which remains one of the key causes of damage. Tree management is not a new idea but it’s a topic that needs to be revisited especially in the context of amenity value. This is especially important at a time when climate change might create a new, critical trigger where action needs to be taken.

How this is operationalised will be interesting. Insurers ultimately have the option to use a carrot or a stick approach to implement change but are more likely to adopt a ‘carrot’ approach which is both softer and likely to be more persuasive.

The Customer Element.

The fourth and perhaps final key element is that of the customer who, even after four decades, seems in many ways to be outside the process. Customers still seem to remain a victim of the problem, a recipient of the solution, and a third party to the process. Future technology-driven claims processes will increasingly place the policyholder at the centre of the procedure, and giving them back greater control.

It might feel to some that the wheel has gone all the way around again but the game has changed as technology becomes a key enabler. At some point insurers will recognise the value of ‘letting go’ of the process – albeit in a managed ecosystem.

In summary, the next generation of subsidence claims settlement is likely to comprise a major shakeup of the modus operandi. Last time, and with the benefit of hindsight, it felt like the subsidence industry led the way in the management of domestic property repairs, and in changes which ultimately extended to other perils. Is history about to repeat itself in the ‘New Future’ of claims management?

tboobier@aol.com