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Technical Bulletin

InFront Innovation – Technical Hub January 2014

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Subsidence Management Services – Issued by the Technical Claims Unit

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Subsidence Management Services

Technical Bulletin

Technical Hub January 2014

Technical Bulletin

Issued by the Technical Claims Unit

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Technical

Bulletin

June, 2015

Technical Hub January 2014– Page 0

Bulletin

Issued by the Technical Claims Unit June 2015


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Read all about it ...

Another busy month in terms of technical updates as

Annual Subsidence Conference at Aston University

The Clay Research Group

covered a wide range of topics but of particular interest to us are th

'fixing' shrinkable clay soils and measuring moisture change

movement without digging holes and testing soils.

Our weather update tracks the progress of the Soil Moisture Deficit (SMD)

records fairly rapid soil drying. Does this suggest an increase in claims this year?

Who can tell but experience tells us a few intermittent showers could change the

outlook very quickly.

Lots going on in the world of liability and insurance. Proportionality is central

our decision making and of course the issue of an insurable interest

considered alongside the usual review of good practice as outlined by decisions

made by the Financial Ombudsman Service.

Annual Subsidence Conference

Change Bee?

Proportionality of Costs : World Class Claims Handling :

- Canopy and Count : Insurable Interest : Insurance Fraud

Task Force :

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Page 1

Read all about it ...

Another busy month in terms of technical updates as well as attendance at the

Annual Subsidence Conference at Aston University. The conference is

The Clay Research Group and celebrated its 13th anniversary this year

covered a wide range of topics but of particular interest to us are th

'fixing' shrinkable clay soils and measuring moisture change

without digging holes and testing soils. A non-invasive approach.

Our weather update tracks the progress of the Soil Moisture Deficit (SMD)

rapid soil drying. Does this suggest an increase in claims this year?


outlook very quickly.

Lots going on in the world of liability and insurance. Proportionality is central

our decision making and of course the issue of an insurable interest


made by the Financial Ombudsman Service.

Annual Subsidence Conference : SMD Update

Change Bee? : Geographic Information Syst

Proportionality of Costs : World Class Claims Handling :

Canopy and Count : Insurable Interest : Insurance Fraud

Task Force : Kent Earthquake : FOS Decisions

Geology and Beer

CONTENTS

June 2015 Edition

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well as attendance at the

. The conference is arranged by

and celebrated its 13th anniversary this year. Speakers

covered a wide range of topics but of particular interest to us are the ideas of

'fixing' shrinkable clay soils and measuring moisture change and building

invasive approach.

Our weather update tracks the progress of the Soil Moisture Deficit (SMD) which

rapid soil drying. Does this suggest an increase in claims this year?


Lots going on in the world of liability and insurance. Proportionality is central to

our decision making and of course the issue of an insurable interest - both are


SMD Update : Climate

Geographic Information Systems

Proportionality of Costs : World Class Claims Handling : Trees

Canopy and Count : Insurable Interest : Insurance Fraud

FOS Decisions

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The 13th annual conference was held at Aston University

heard from some leading industry figures about what the future may hold.

particular interest were the talks delivered by Prof. Ian Jefferson, Birmingham

University and Dr. Nigel Cassidy, Keele

Working together, t

of projects to see if the clay soil within the root zone of

'fixed'. The objective is to remove or reduce the shrink/swell properties and perhaps

develop an alternative

environmentally friendly than current methods.

to allow retention of

The technique is called electrokinesis osmosis (EKO) and involves

rods into the ground (about 300

fluid at the site of one rod and then passing a charge between them using a low

voltage.

The fluid is forced through the soil by the

structure is perman

make the walls of excavations in clay

How would we know that the EKO treatment was working? Nigel Cassidy

instrumented the site t

Using electrical resistivity

resistivity drops) or drier (the resistivity increases)

The EKO work formed the subject of a PhD for Tom

handed in for consideration and the good news is, he has found employment.

There are issues for us before this approach can be utilised. For example, was there

any shrinkage associated with the treatment? Laboratory trials by

years ago suggested the initial shrinkage exceeded that caused by tree roots. Tom

Clinton explained that the introduction of the fluids meant shrinkage wasn't a

problem.

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Annual Subsidence ConferenceDirected by The Clay Research Group

The 13th annual conference was held at Aston University on the 16th June

heard from some leading industry figures about what the future may hold.


University and Dr. Nigel Cassidy, Keele University.

Working together, they instrumented the site at Aldenham and carried out a series

of projects to see if the clay soil within the root zone of the willow tree could


develop an alternative method of underpinning that is cheaper, faster and more

environmentally friendly than current methods. One of the major benefits would be

ention of the tree in some instances.

technique is called electrokinesis osmosis (EKO) and involves

rods into the ground (about 300 - 400mm apart in the experiment), introducing a


The fluid is forced through the soil by the current and in the proc

structure is permanently altered. The concept isn't new. It was used in

walls of excavations in clay soil waterproof to house U boats

we know that the EKO treatment was working? Nigel Cassidy

instrumented the site to measure moisture change associated with the process.

ical resistivity (ER) Nigel could detect if the soil is getting wetter (the

resistivity drops) or drier (the resistivity increases).

The EKO work formed the subject of a PhD for Tom Clinton. His thesis has been



any shrinkage associated with the treatment? Laboratory trials by



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Annual Subsidence Conference

on the 16th June and we

heard from some leading industry figures about what the future may hold. Of


hey instrumented the site at Aldenham and carried out a series

the willow tree could be


method of underpinning that is cheaper, faster and more

One of the major benefits would be

technique is called electrokinesis osmosis (EKO) and involves sinking two steel

400mm apart in the experiment), introducing a


current and in the process the clay

The concept isn't new. It was used in WW2 to

to house U boats.

we know that the EKO treatment was working? Nigel Cassidy

o measure moisture change associated with the process.

Nigel could detect if the soil is getting wetter (the

Clinton. His thesis has been



any shrinkage associated with the treatment? Laboratory trials by MatLab some



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Annual Subsidence Conference ...

The treatment zone

trees are present, the depth of desiccation can reach 4mtrs. Th

achievable using this method but rods would need to be designed.

How long does it take? Possibly a few months to treat the depth of the root zone.

However, the biggest problem that we foresee

treated soil beneath the foundation is unlikely to act in isolation. It is embedded

ground that will contin

treated and untreated zones.

Nigel produced imag

used to investigate subsidence claims.

simplistically. The benefits would be significant. Showing where the ground is dry (or

wet) relative to surrounding g

electrolevels would avoid the expense and disruption of traditional methods. No

excavations, soil testing or monitoring.

Nigel tells us that the Rasberry Pi computer sys

handle all of the data and processing.

data use of course) the whole assembly would probably take less than a day to set

up. Data delivered

gathered over time, at far less cost than is currently the case.

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Annual Subsidence Conference ... continued

The treatment zone at Aldenham was relatively shallow. In cases where mature

nt, the depth of desiccation can reach 4mtrs. Th

le using this method but rods would need to be designed.


However, the biggest problem that we foresee is the fact that a narrow strip of

treated soil beneath the foundation is unlikely to act in isolation. It is embedded

ground that will continue to move seasonally - there are no slip plane

treated and untreated zones.

Nigel produced images of how his measurement of electrical resistivity might be

used to investigate subsidence claims. Below we have tried to illustrate this


wet) relative to surrounding ground and measuring building movement by adding


excavations, soil testing or monitoring. See image below.

Nigel tells us that the Rasberry Pi computer system, costing around £

handle all of the data and processing. By using the homeowners WiFi (paying for


delivered 24/7 would mean a quicker claim settlement and meaningful data

thered over time, at far less cost than is currently the case. More next month.

Page 3

Diagrammatic plot of ER monitoring

at shallow dep

influence of a root zone might

appear. The soil would be drier in

the root zone in the summer (left),

and reach equilibrium in the winter

Invert the model and we might be

able to detect wetter soils where

drains are leaking. Readings would

probably be required at a

say 1.5m below ground for the most

meaningful results.


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continued

was relatively shallow. In cases where mature

nt, the depth of desiccation can reach 4mtrs. This is no doubt

le using this method but rods would need to be designed.


is the fact that a narrow strip of

treated soil beneath the foundation is unlikely to act in isolation. It is embedded in

no slip planes between the

es of how his measurement of electrical resistivity might be

Below we have tried to illustrate this


round and measuring building movement by adding


tem, costing around £40, could

By using the homeowners WiFi (paying for


24/7 would mean a quicker claim settlement and meaningful data

More next month.

matic plot of ER monitoring

shallow depth showing how the

influence of a root zone might

The soil would be drier in

the root zone in the summer (left),

and reach equilibrium in the winter

(right).

Invert the model and we might be

able to detect wetter soils where

leaking. Readings would

probably be required at a depth of

1.5m below ground for the most

meaningful results.

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The blue line plots the current position of the Soil Moisture Deficit (SMD) and

compares with the average of recorded event years and

year. The current trend suggests a dry summer and we could be excused for

anticipating an increase in claims.

However, over the last 8 years such trends have been interrupted by intervals of

heavy rainfall. Perhaps a function of

left we see the jet stream sat fair and square over the UK.

movement north might take place shortly drawing the warmer weather up from the

south.

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SMD Update


compares with the average of recorded event years and the averages of a normal


anticipating an increase in claims.


heavy rainfall. Perhaps a function of the climate changes that we read about. Bottom

left we see the jet stream sat fair and square over the UK. It is possible that



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the averages of a normal



the climate changes that we read about. Bottom

It is possible that some


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Frightening reports were coming in relating to the sighting of a giant

Eden Project in Cornwall and some sci

team were dispatched with suitable protective clothing and got within camera

range to take this picture. Fortunately we can report it isn't real. It's

Nothing to worry about but we must keep our eye on it.

Pedunculate Oak

The pedunculate oak c

starting 10th April lasting through until

the 20th May or thereabouts. This

compares with around the 30th March

extending through to 4th May in 2014.

How do we know? We visited ...

http://www.naturescalendar.org.uk/

It's interesting to see how various species

of tree interact with the climate.

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Climate Change Bee?

Frightening reports were coming in relating to the sighting of a giant

in Cornwall and some scientists were blaming global warming. Our


range to take this picture. Fortunately we can report it isn't real. It's

Nothing to worry about but we must keep our eye on it.

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Pedunculate Oak

The pedunculate oak came into leaf

starting 10th April lasting through until

the 20th May or thereabouts. This

compares with around the 30th March

extending through to 4th May in 2014.

How do we know? We visited ...

http://www.naturescalendar.org.uk/

's interesting to see how various species

of tree interact with the climate.


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Frightening reports were coming in relating to the sighting of a giant bee at the

re blaming global warming. Our


range to take this picture. Fortunately we can report it isn't real. It's just a model.

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Geographic Information Systems (GIS)

insurers around 1990

data then the need for maps was superfluous;

as high risk, what could be gained by seeing it on a map?

Not only can we visualise the risk better, the links with other elements (geology in

particular) can be assessed.

Google Earth has an application that a

mapping for free. A

import data from an Excel spreadsheet in a matter of seconds.

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Geographic Information Systems (GIS) started to become more widely

around 1990 - 1995. Dismissed initially on the basis that if you had the

e need for maps was superfluous; if a certain postcode was identified

as high risk, what could be gained by seeing it on a map?


particular) can be assessed.

Google Earth has an application that allows the user to undertake rudimentary

A easy-to-use interface (www.batchgeo.com)

import data from an Excel spreadsheet in a matter of seconds.

We were introduced to the joys

of GIS around 1995 when we

plotted the height and location

of the trees in London usi

aerial photography.

days, measuring heights was a

lengthy task involving binocular

viewing glasses and transparent

images laid side by side.

Times move quickly and when

we next undertook the task in

2005 it was largely automated

using laser technology. A much

faster process and

including canopy cover

grid.

By adding building outlines

using Ordnance

we could visualise

unit level. GIS systems allow the

user to carry out quite complex

calculations '


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started to become more widely adopted by

on the basis that if you had the raw

certain postcode was identified


llows the user to undertake rudimentary

(www.batchgeo.com) allows the user to

We were introduced to the joys

of GIS around 1995 when we

plotted the height and location

of the trees in London using

aerial photography. In those

days, measuring heights was a

lengthy task involving binocular

viewing glasses and transparent

images laid side by side.

Times move quickly and when

we next undertook the task in

2005 it was largely automated

using laser technology. A much

er process and this time

including canopy cover on a 1m

By adding building outlines

rdnance Survey mapping

visualise the risk at

unit level. GIS systems allow the

carry out quite complex

'behind the scenes'.

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Proportionality of Costs in Legal

As claims handlers, ensuring that costs are proportionate to the sum at issue is

second nature. There’s no point spend

repair amounts to £5K. (The only exception might be if fraud is suspected when,

the greater good of both insurers and the insuring public, different expense

considerations apply.)

The Financial Ombudsman Service (FOS) fully understands the principle, whether it

be in indemnity spend or handling cost. An insurer agreed to pay £1,

of damage to two floor tiles in a kitchen, made up of £500 repair plus £500 for loss

of match.

Re-tiling the whole kitchen would cost £2,500. FOS practice is to allow the cost of

repairing the damage plus up to 50% of replacing the remaind

additional cash payment of 50% of replacing the undamaged tiles would be

disproportionate in this particular case’. £1,000, rather than the FOS maximum of

£1,500, was sufficient.

An insurer had a written statem

information and that the cost of employing an interpreter to obtain further

information was disproportionate. ‘I do not think this is unreasonable in all of the

circumstances.’ Case reference

The principle of proportionality has now been emphasised further in the Civil

Procedure Rules which govern legal cases in which we are involved whether in

recoveries or disputes with policyholders. There are a number of changes, effective

from April. The objectives are broadly as before

information at an early stage in order to attempt to narrow the issues and/or resolve

the dispute. However, there is a greater focus on efficient case management and

proportionate costs.

Parties are now required to take ‘only reasonable and proportionate steps’ to

identify, narrow and resolve the issues in dispute. A party will be unable to recover

any disproportionate costs incurred in complying with any protocol or practice

direction. There are adverse costs sanctions for parties who refuse or fail to respond

to invitations to participate in Alternative Dispute Resolution.

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Proportionality of Costs in Legal Disputes


second nature. There’s no point spending £4K to investigate a claim

£5K. (The only exception might be if fraud is suspected when,


considerations apply.)


be in indemnity spend or handling cost. An insurer agreed to pay £1,


tiling the whole kitchen would cost £2,500. FOS practice is to allow the cost of

repairing the damage plus up to 50% of replacing the remaind



£1,500, was sufficient. Case reference DRN1495823.

An insurer had a written statement from a policyholder. It felt that it had sufficient



Case reference DRN3181713.




The objectives are broadly as before - to encourage parties to exchange



sts.




ion. There are adverse costs sanctions for parties who refuse or fail to respond

to invitations to participate in Alternative Dispute Resolution.


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Disputes


a claim when the cost to

£5K. (The only exception might be if fraud is suspected when, for



be in indemnity spend or handling cost. An insurer agreed to pay £1,000 in respect


tiling the whole kitchen would cost £2,500. FOS practice is to allow the cost of

repairing the damage plus up to 50% of replacing the remainder. ‘I think an



ent from a policyholder. It felt that it had sufficient






to encourage parties to exchange






ion. There are adverse costs sanctions for parties who refuse or fail to respond

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Proportionality of Costs

Two recent cases show the need for change. One case involved a claim for around

£900K. The claimant ‘won’ but their costs of £202K were reduced to £96K. An

experienced partner had become overly

Savoye v Spicers. http://www.bailii.org/ew/cases/EWHC/TCC/2015/33.html

A claimant submitted a budget of £9.5M in a case to be heard in the Technology

and Construction Court.

The court described this as ‘unre

slashed the budget to £4.3M

amount claimed in the dispute was £18M, although this was said to be grossly

inflated.

The embarrassed claimant solicitors were Sq

that boasts a profit of US$ 840K for each equity partner. CIP Properties v Galliford

Try. http://www.bailii.org/ew/cases/EWHC/TCC/2015/481.html

308mm is the theo

maximum value

Moisture Deficit caused by

trees. The maximum value for

grass cover is 134mm

much riskier than grass

produce more ground

movement. In practice it is the

localised ground

associated with root activity

that results in differential

movement and damage.

Subsidence Factoids

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Proportionality of Costs ... continued



experienced partner had become overly-involved in detailed work on the case.

http://www.bailii.org/ew/cases/EWHC/TCC/2015/33.html


and Construction Court.

The court described this as ‘unreliable, disproportionate and unreasonable’. It

slashed the budget to £4.3M – less than the claimant had already spent. The


The embarrassed claimant solicitors were Squire Patton Bogg, an international firm



8mm is the theoretical

for the Soil

Moisture Deficit caused by

trees. The maximum value for

grass cover is 134mm. Trees are

much riskier than grass and

produce more ground

In practice it is the

localised ground movement

associated with root activity

that results in differential

movement and damage.

Subsidence Factoids

Page 8

Sinkhole vulnerability map published by the BGS


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continued



involved in detailed work on the case.



liable, disproportionate and unreasonable’. It

less than the claimant had already spent. The


uire Patton Bogg, an international firm



Sinkhole vulnerability map published by the BGS

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‘The claims handler needs to make the claimant feel that even though the event that

started the process (the accident) was bad the process, the experience and the

outcome were good

Some customer requirements of a claims team:

• a fair settlement

• a prompt settlement

• to be kept informed

• communicate

• adequate resource

• professional dealings

• consistency

• a case manager approach

• the right expert at the right time

• invisible internal processes

• to deal with an empowered representative

‘An effective low touch approach

‘The best activities for quality claims adjusters remain: investigation, evaluation and

negotiation.’

These are all quotes from a lecture to the Insurance Institute of London by Jonathan

Clark, a former head of CII’s Faculty of C

lecture, which will be of interest to those concerned with the broader aspects of first

party claims handling.

CII members can see the video and slides at:

http://www.cii.co.uk/knowledge/insurance

world-class-in-claims/33142

of the slides, which are at:

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World Class Claims Handling


process (the accident) was bad the process, the experience and the

outcome were good – that they were well treated and cared about.’

Some customer requirements of a claims team:

a fair settlement

a prompt settlement

to be kept informed

communicate honestly and clearly

adequate resource

professional dealings

consistency

a case manager approach

the right expert at the right time

invisible internal processes

to deal with an empowered representative

‘An effective low touch approach – if you pick up a file do something useful.’



Clark, a former head of CII’s Faculty of Claims. There are other points made in the


party claims handling.

CII members can see the video and slides at:

http://www.cii.co.uk/knowledge/insurance-institute-of-london/articles/what

claims/33142. Otherwise, ask a member of TCU to forward you a copy

of the slides, which are at: T:/Technical Information/Insurance Principles/World Class

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process (the accident) was bad the process, the experience and the

that they were well treated and cared about.’

le do something useful.’



laims. There are other points made in the


london/articles/what-is-

Otherwise, ask a member of TCU to forward you a copy

T:/Technical Information/Insurance Principles/World Class

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Counting the trees and measuring the canopy

The web application

percentage of ground area

in the UK.

As can be seen from these graphs, although London

Birmingham has a higher canopy cover.

posed by large trees on the shrinkable so

canopy reduction is the norm.

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Counting the trees and measuring the canopyhttp://www.treezilla.org/

web application TreeZilla records the total canopy cover (expressed as a

of ground area) and count of trees for some major towns and cities

As can be seen from these graphs, although London has a high count of trees,

Birmingham has a higher canopy cover. This almost certainly reflects the risk

posed by large trees on the shrinkable soils of the south east where regular

canopy reduction is the norm.


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Counting the trees and measuring the canopy

records the total canopy cover (expressed as a

count of trees for some major towns and cities

as a high count of trees,

This almost certainly reflects the risk

ils of the south east where regular

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This taskforce was set up in January under the auspices of the government. Members

include the Association of British Insurers,

Advice, Financial Services Consumer Panel, British Insurance Brokers’ Association and

the Insurance Fraud Bureau

point was the estimate that insurance fraud ad

insurance bill. The ABI estimates that detected insurance fraud was £1.3 billion in

2013.

An interim report has been published. Much of the focus is around fraudulent

personal injury claims where the injury cannot easily

probably all still receive those irritating canvassing telephone calls.

Our particular interest is in fraudulent first party claims. The Taskforce is currently

canvassing opinions on five questions:

• How could engagement with

to reduce insurance fraud?

• How might communications be used to discourage dishonest claims and

should these communications emphasise the effect of fraud on honest

policyholders?

• How common is the perception th

• Do the actions of any party involved in the underwriting or claims process

encourage the perception that insurance fraud is justifiable?

• What more could be done to make insurance fraud socially unacceptable?

The final report is due by the end of this year. Further information is at:

https://www.gov.uk/government/groups/insurance

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Insurance Fraud Taskforce


include the Association of British Insurers, Financial Ombudsman Service, Citizens


the Insurance Fraud Bureau – a good cross section of interested parties. Its starting

point was the estimate that insurance fraud adds £50 to each household’s annual



personal injury claims where the injury cannot easily be proved or disproved. We



on five questions:

How could engagement with consumers and consumer education be improved

to reduce insurance fraud?

How might communications be used to discourage dishonest claims and


policyholders?

common is the perception that insurance fraud is a victimless crime?

Do the actions of any party involved in the underwriting or claims process


What more could be done to make insurance fraud socially unacceptable?

final report is due by the end of this year. Further information is at:

https://www.gov.uk/government/groups/insurance-fraud-taskforce#interim


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Financial Ombudsman Service, Citizens


a good cross section of interested parties. Its starting

ds £50 to each household’s annual



be proved or disproved. We



consumers and consumer education be improved

How might communications be used to discourage dishonest claims and


at insurance fraud is a victimless crime?

Do the actions of any party involved in the underwriting or claims process


What more could be done to make insurance fraud socially unacceptable?

final report is due by the end of this year. Further information is at:

taskforce#interim-report

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We still see the occasional case that sends us back to the text books. Last year we

dealt with a claim from a policyholder who, it turned out, had a poor credit history

so had persuaded a friend to apply for a mortgage on a property

of a house. The property was bought in the friend’s name.

Policyholder paid the £30K deposit and made the monthly repayments. So the

insurance policy wasn’t in the name of the person listed as owner at Land Registry.

To make the case more interesting, the f

property but defaulted on repayments, triggering repossession action by the bank

with the second charge against the property.

The property was damaged by subsidence. Having initiated a mortgage fraud and

not being the registered owner, but having paid a deposit and paid monthly

repayments, did the policyholder have an insurable interest in the property?

To add more spice to the story, the downstairs flat was legally owned by our

policyholder. However, it was o

policy in their name, with another insurer.

As it happens, the insurable interest debate was overtaken by events. Policyholder

submitted a fraudulent invoice in support of a claim for expenses so his cl

kicked out on those grounds. He complained to the Financial Ombudsman Service

describing himself on their form as a police officer

complaint.

Insurable interest is one of the six principles of insurance.

In the 18th century, it was not unknown for someone to take out a policy on the life

of a person they didn’t know, as a wager. If that person died or was killed, the

policyholder collected the pay

The Marine Insurance Act of 1746 and the Life Assurance Act 1

discourage gambling by making it illegal to take out policies if the beneficiary didn’t

have a financial interest in the property or life insured.

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Insurable Interest



so had persuaded a friend to apply for a mortgage on a property

a house. The property was bought in the friend’s name.



To make the case more interesting, the friend secretly took out a loan against the


with the second charge against the property.


ing the registered owner, but having paid a deposit and paid monthly



policyholder. However, it was occupied by his parents who had taken out a buildings

policy in their name, with another insurer.


submitted a fraudulent invoice in support of a claim for expenses so his cl

kicked out on those grounds. He complained to the Financial Ombudsman Service

describing himself on their form as a police officer - but they didn’t uphold his

Insurable interest is one of the six principles of insurance.

century, it was not unknown for someone to take out a policy on the life


policyholder collected the pay-out.

The Marine Insurance Act of 1746 and the Life Assurance Act 1


have a financial interest in the property or life insured.


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so had persuaded a friend to apply for a mortgage on a property – the upstairs flat



riend secretly took out a loan against the



ing the registered owner, but having paid a deposit and paid monthly



ccupied by his parents who had taken out a buildings


submitted a fraudulent invoice in support of a claim for expenses so his claim was

kicked out on those grounds. He complained to the Financial Ombudsman Service -

but they didn’t uphold his

century, it was not unknown for someone to take out a policy on the life


The Marine Insurance Act of 1746 and the Life Assurance Act 1774 tried to


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Case law developed the principle of insurable interest in property, a classic

description being contained in Lucena v Crauford (1806), and it was codified in the

Marine Insurance Act 1906. Since then, there haven’t been many further

developments – until no

Having reformed personal insurances through CIDRA 2012 (The Consumer

Insurance Disclosure & Representations Act) and commercial insurances through

the Insurance Act 2015, the Law Commission isn’t resting on its laurels. Jointly with

the Law Commission o

proposed changes to the law of insurable interest.

Most of the changes affect life assurance. For indemnity insurance, in which we are

interested, the changes are mainly aimed at re

Insurable interest might become a statutory requirement. When should the

interest exist – at time of loss, at policy inception or both? The Commission

considers:

(1) What interest must be shown for an insurance contract to be

(2) What are the consequences of an insurance contract being considered void for

lack of insurable interest?

(3) When may the policyholder claim for a loss?

We will report on the subject in more detail when a Bill is drafted, whenever that

may be. A government with a small majority tends to be selective about which bills

it places before parliament and which it holds back. The Law Commission

consultation closes on 29 June. Further information is at

http://lawcommission.justice.gov.uk/areas/insurance

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Page 13 Page 13

Insurable Interest ... continued




until now




the Law Commission of Scotland, it has published a paper seeking further views on

proposed changes to the law of insurable interest.


interested, the changes are mainly aimed at re-stating existing law in a clearer way.


at time of loss, at policy inception or both? The Commission

(1) What interest must be shown for an insurance contract to be


lack of insurable interest?

(3) When may the policyholder claim for a loss?


be. A government with a small majority tends to be selective about which bills


consultation closes on 29 June. Further information is at:-

http://lawcommission.justice.gov.uk/areas/insurance-contract


Bulletin








f Scotland, it has published a paper seeking further views on


isting law in a clearer way.


at time of loss, at policy inception or both? The Commission

(1) What interest must be shown for an insurance contract to be valid?



be. A government with a small majority tends to be selective about which bills


contract-law.htm

Technical Bulletin


Technical


Gold

It struck at 2.52am on 22 May. The focus

ten miles underground. Its epicentre

above the focus - was a Ramsgate golf course in the CT10 postcode area.

The most common measure of the intensity of an earthquake is the Richter scale,

developed by Charles Richter, of the California Institute of Technology in 1935. The

Kent earthquake measured 4.2 compared with, for example, the April earthquake in

Nepal at 7.9. Whilst th

Richter’s scale is that it’s logarithmic and measures the wave amplitude of an

earthquake.

Waves are vibrations that transfer energy from place to place. We see something

similar in a Mexican w

while each spectator stays in their seat, only moving up then down w

turn.

Amplitude is the amount of up and down movement of a wave. The greater (higher)

the amplitude, the stronger

earthquake are ten times greater than on a 5.0 earthquake. More importantly for

the damage, the amount of energy that is released increases by 31.7 times between

each whole number.

The Nepal earthquake was therefore 260,000 times stronger, in terms of energy

released, than the Kent one. The majority of earth tremors are micro

registering less than 3 on the Richter scale and not felt by humans. Kent isn’t quite

the San Andreas fault, but there was a 4.3 earthquake at Folkestone, just 25 miles

away, in April 2007.

We are interested in earthquakes on two counts. Whilst we mainly deal with

subsidence claims, we are also asked by clients to deal with structural damage

caused in other ways. There was such minor damage in the Kent earthquake that we

haven’t received – and don’t particularly expect

The other reason for keeping track of earthquakes is in case we find unexplained

damage in the future. The last sig

2008, 5.2 Richter, centred on Market Rasen, Lincs.

.

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Page 14 Page 14

Kent Earthquake

It struck at 2.52am on 22 May. The focus – the point of origin of an earthquake

ten miles underground. Its epicentre - the point on the earth's surface vertically

was a Ramsgate golf course in the CT10 postcode area.

on measure of the intensity of an earthquake is the Richter scale,



Nepal at 7.9. Whilst the figures don’t seem that far apart, the important feature of



similar in a Mexican wave at a sports event. The wave moves around the stadium,

while each spectator stays in their seat, only moving up then down w

is the amount of up and down movement of a wave. The greater (higher)

the amplitude, the stronger the wave. On a logarithmic scale, the waves on a 6.0



each whole number.


released, than the Kent one. The majority of earth tremors are micro


fault, but there was a 4.3 earthquake at Folkestone, just 25 miles



ther ways. There was such minor damage in the Kent earthquake that we

and don’t particularly expect – any instructions.


damage in the future. The last significant earthquake in the UK was in February

2008, 5.2 Richter, centred on Market Rasen, Lincs.


Bulletin


the point of origin of an earthquake - was

the point on the earth's surface vertically

was a Ramsgate golf course in the CT10 postcode area.

on measure of the intensity of an earthquake is the Richter scale,



e figures don’t seem that far apart, the important feature of



ave at a sports event. The wave moves around the stadium,

while each spectator stays in their seat, only moving up then down when it's their

is the amount of up and down movement of a wave. The greater (higher)

the wave. On a logarithmic scale, the waves on a 6.0




released, than the Kent one. The majority of earth tremors are micro-quakes,


fault, but there was a 4.3 earthquake at Folkestone, just 25 miles



ther ways. There was such minor damage in the Kent earthquake that we

any instructions.


nificant earthquake in the UK was in February

Technical Bulletin


Technical


Gold

Just a couple of years ago we were dealing with crack damage to a retaining wall in

North Derbyshire. There was no obvious cause and all parties agreed that it was

most likely due to the 2008 earthquake.

The UK has many minor

up to the 19th according to the BGS web site and well over 20 in May.

recorded in modern times due to the use of social networks to report them

Book, Twitter etc.

Earthquake is one of the

example on unoccupied buildings

earthquake, aircraft. Sometimes it’s FLEEA cover, with explosion added. In most

years there are few earthquake claims

claims - aircraft or things falling from them hitting a building

If you need a quick reminder of recent UK earthquakes, ask a member of TCU to

check T/Technical Information/ Earthquake. Otherwise get the f

http://www.earthquakes.bgs.ac.uk/

Technical Bulletin


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Page 15



most likely due to the 2008 earthquake.

minor earthquakes - in June alone there have been 10 recorded

up to the 19th according to the BGS web site and well over 20 in May.

recorded in modern times due to the use of social networks to report them

Earthquake is one of the traditional perils. When insurers give restricted cover

example on unoccupied buildings – it is called FLEA cover; fire, lightning,


years there are few earthquake claims in the UK but there aren’t many aircraft

aircraft or things falling from them hitting a building - either


check T/Technical Information/ Earthquake. Otherwise get the f

http://www.earthquakes.bgs.ac.uk/

Page 15


Bulletin




there have been 10 recorded

up to the 19th according to the BGS web site and well over 20 in May. More are

recorded in modern times due to the use of social networks to report them - Face

traditional perils. When insurers give restricted cover – for

it is called FLEA cover; fire, lightning,


in the UK but there aren’t many aircraft

either


check T/Technical Information/ Earthquake. Otherwise get the full detail at

Technical Bulletin


Technical


Gold

Conservatory

Foundations

DRN0762040

Building Regulation

Compliance

DRN6785040

Defective

construction

DRN6905404

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Page 16

Page 16

FOS Decisions - ConservatoriesDecisions Published on the FOS web site

House purchased in 2006. Claim in 2009. Initially accepted.

Subsequently emerged that previous owner had submitted

a claim for conservatory damage which had been rejected.

Damage to conservatory foundations due to PH’s trees.

Current insurers then repudiated the new claim on basis of

defective design. Repudiation upheld. ‘Innocent

purchaser’ argument not applied. ‘The trigger for

insurer was finding out about that the previous owner had

experienced a subsidence problem with the conservatory

in 2005. It was therefore not unreasonable to change its

position and use of the policy exclusion. I accept that Ms W

has suffered a loss of expectation in view of

change in position. However, the insurer

work on the conservatory and so the claim was still being

considered.’

Subsidence damage to conservatory built in 2005. Insurers

repudiated; inadequate foundations; faulty design.

Insurers required to indemnify. They confused ‘guidelines’

with ‘rules’ and did not recognise that Building Regulations

didn’t apply to this conservatory when it was built.

Crack damage to conservatory in 2011. Adjuster

understood that the conservatory had been built in 1995.

Accepted as valid claim; the conservatory had stood the

test of time. A year later, it was discovered that the

conservatory had been built in 2004. Damage was seven

years later. Claim declined on basis of defective design

inadequate foundations. Insurer’s position upheld. ‘The

evidence suggests that the proximity of trees and the clay

soil were not taken account of when the

built. Investigations had shown that the shrinkable clay

beneath the conservatory contained tree roots. Therefore,

I cannot suggest the insurer acted unreasonably.’


Bulletin


Conservatories

House purchased in 2006. Claim in 2009. Initially accepted.

Subsequently emerged that previous owner had submitted

a claim for conservatory damage which had been rejected.

Damage to conservatory foundations due to PH’s trees.

ed the new claim on basis of

defective design. Repudiation upheld. ‘Innocent

purchaser’ argument not applied. ‘The trigger for the

was finding out about that the previous owner had

experienced a subsidence problem with the conservatory

was therefore not unreasonable to change its

position and use of the policy exclusion. I accept that Ms W

has suffered a loss of expectation in view of insurer's

the insurer had not started

claim was still being

Subsidence damage to conservatory built in 2005. Insurers

repudiated; inadequate foundations; faulty design.

Insurers required to indemnify. They confused ‘guidelines’

with ‘rules’ and did not recognise that Building Regulations

rvatory when it was built.

Crack damage to conservatory in 2011. Adjuster

understood that the conservatory had been built in 1995.

Accepted as valid claim; the conservatory had stood the

test of time. A year later, it was discovered that the

y had been built in 2004. Damage was seven

years later. Claim declined on basis of defective design –

Insurer’s position upheld. ‘The

evidence suggests that the proximity of trees and the clay

when the conservatory was

built. Investigations had shown that the shrinkable clay

beneath the conservatory contained tree roots. Therefore,

acted unreasonably.’

Technical Bulletin


Technical


Gold

‘Geology is a fundamental control on many elements of civilisation so it is no

wonder that it is inextricably linked to one of the oldest concoctions of Mankind.’

This is the conclusion of an article in this month’s Geoscientist magazine.

An aquifer is a layer of

aquifer determines the chemical components of ground

on the local beer. For example:

• Burton–on-Trent: well water comes from evaporate rich Permo

sandstones and is hard and high in calcium and sulphate. (Bitter, including India

Pale Ale [IPA]).

• Dublin: has water derived from Carboniferous Limestones. (Porter and Stout

including Guinness).

• London: waters are from Cretaceous Chalk which gives a slightly diffe

composition to the Dublin waters. (Porter and Stout).

That’s the educational element to justify inclusion in this Bulletin. The rest of the

Geoscientist article is beyond our scope but is recommended reading for anyone

interested in the evolution

http://www.geolsoc.org.uk/Geoscientist/June

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Page 17

Geology and Beer

fundamental control on many elements of civilisation so it is no



An aquifer is a layer of rock or soil able to hold or transmit a volume of water. The

aquifer determines the chemical components of ground-water and hence its effects

on the local beer. For example:

Trent: well water comes from evaporate rich Permo

and is hard and high in calcium and sulphate. (Bitter, including India

Dublin: has water derived from Carboniferous Limestones. (Porter and Stout

including Guinness).

London: waters are from Cretaceous Chalk which gives a slightly diffe

composition to the Dublin waters. (Porter and Stout).



interested in the evolution of beer from its early beginnings 7,000 years ago.

http://www.geolsoc.org.uk/Geoscientist/June-2015/Online-Special-

Page 17


Bulletin


fundamental control on many elements of civilisation so it is no



rock or soil able to hold or transmit a volume of water. The

water and hence its effects

Trent: well water comes from evaporate rich Permo-Triassic

and is hard and high in calcium and sulphate. (Bitter, including India

Dublin: has water derived from Carboniferous Limestones. (Porter and Stout

London: waters are from Cretaceous Chalk which gives a slightly different ion



of beer from its early beginnings 7,000 years ago.

-Geology-and-Beer

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