2009 Storm & Flood Commentary

Clearys Claims Managers

In 2009, the whole country experienced severe flooding and storm damage.

It was called the worst event in 50 years – indeed, some suggested it was the worst in living memory. Global warming was blamed for the damage or, at least, for having contributed to it. Bad planning and development were also highlighted as causes for many of the properties affected.

Today, only 6 years later, things are as bad as ever – worse indeed, given that the proportion of properties having flood insurance cover is much lower now than it was in 2009.

Following the flooding in 2009, many buildings were repaired with the money paid by Insurers making buildings habitable, comfortable and usable again. Little thought was put into preparing for similar occurrences happening again and certainly not only 6 years later.

This is a tragedy.

Clearys have come across numerous cases of flood damage where there is no insurance cover this time around. TV programmes and interviews are highlighting the extremely difficult circumstances this type of slow, insidious, destructive damage has inflicted on many unfortunate householders, farmers and businesses. Others in vulnerable areas, though not yet affected, are fearful for the future.

Securing assistance from the state is a possibility but the funds available to successful applicants are very low. Even at that, compensation is available only to those who do not have insurance cover and have suffered clear and specific damage. The Irish Red Cross are also distributing funds and humanitarian aid to people exposed to flooding but similar limitations apply to that scheme.

After the 2009 event, there was much work done by the state, through local authorities and the Office of Public Works. Defined areas which would be categorised as flood zones for national flood mapping purposes were identified. The insurers then availed of this service and either withdrew flood cover for property in these areas or hiked premiums for those who were “lucky” enough to be offered cover. Of course they would – what would you do?

The ball was then dropped by the state. No planning was put in place to deal with the obvious: what would happen to all those areas and their inhabitants, businesses and farm owners when flooding returned? Far fewer of them would have insurance cover next time around.

The Irish solution to this Irish problem was for government to call a meeting with the insurance industry after the horse had bolted. Clearly, for many unfortunate victims of recent events, there was no access to funds, allied to which they had the worry and stress of possible further recurrences with no prospect of cover being reinstated. Even if cover was available, it would be prohibitively expensive.

It appears to me that a possible solution for the state, property and business owners, insurers and, indeed, charities is to define a plan for residents and businesses that are in this “Catch 22” situation: Let the state assist them in buying insurance cover going forward and stop all future development, without appropriate flood protection, in these areas.

This scheme could include loss of profits cover for farmers and businesses. Cover could be capped so the potential recoveries deal with ‘humanitarian’ issues if they arise. The claims would be dealt with by the insurance industry. The state would have no involvement in the process nor would the charities.

Ultimately, it should be clear to everyone that continuing to reside in flood zones carries a risk and that, over time, people should have the choice and wherewithal to move away from them.

Such a scheme would mean that the cost to the state could be evenly spread over time and insurers could remain on the pitch with all the structures to deal with this problem at no additional cost to them.

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Handling of Insurance Claims for Small and Medium-sized Enterprises [SMEs]

This article from the UK’s Financial Conduct Authority provides confirmation of all of the claim issues that we see all of the time. Some of these issues are easily dealt with while some are not. The Executive Summary refers to “unregulated firms such as Loss Adjusters and Third Party Administrators (TPAs)” and are often involved in the claims process. The implication here is that this contributes to difficulties for the consumer/claimant.

The findings section speaks for itself, the main issues being:

  1. who should drive the claim?
  2. significant under insurance (Para 1-14).

Our view is that the insurer is in the driving seat. They write the policy, they control payments, they deal with all background investigation into disclosure & claims history, warranty & liability investigation and forensic investigation. Clearly a mine field.

It is clear that the claimant must, in any claim situation, have access to specialist claim advice. It is only then that the pitch is levelled to some degree.

What if your Property is Affected by Subsidence?

Subsidence is a tricky problem for a number of reasons. Firstly, it is difficult to prove without lengthy and time-consuming tests. Secondly, there is no ‘home remedy’ – the only way to solve the problem is to hire expert professionals who deal with soil erosion, structural foundations and the like. And thirdly, the longer you leave it unresolved, the worse it will be.

There are many factors that can cause subsidence. It could be because of soil erosion due to inadequate drainage under your property, or if significant tree felling occurs in the vicinity of the building this can cause soil to shift under the foundations. Signs of subsidence include widening cracks in walls or diagonal cracks rather than cracks that run along the joining corner of two walls.

Subsidence

Repairing the visible damage without addressing the problem itself is literally ‘smoothing over the cracks’ – the damage will reappear and will be worse each time. Not only does this leave the problem of subsidence unsolved, it’s also a waste of money, can devalue your property, and will cause ongoing problems.

Unfortunately, if you suspect your property may have subsidence damage, the only thing to do is begin the process of surveying, draining, testing and monitoring with a team of expert professionals who will devise the best course of action. At this point, before any major expenses have been incurred, it is vital to contact a loss assessor. The assessor will visit the property, document the damage (both to the property and to your business as a result), and compile a definitive report which you should then submit to your insurance company to aid your claim. Loss assessors are completely impartial, have expert knowledge, and will work to make sure the most accurate result is achieved from the insurance claim.

To minimise the risk of subsidence, check drains and pipes regularly for blockages or leaks. Make sure that any trees in the vicinity of the building are pruned regularly to reduce their water uptake, and if any new trees are to be planted in the area, they should be a minimum of the length the adult tree will reach from the property. Of course, keep an eye out around the building for tell-tale cracks too, and if necessary, take photos of them periodically to assess whether they are widening or not.

What to do if your business suffers from malicious damage or burglary?

All properties are at risk of malicious damage or burglary, no matter how good the location or how well-respected the business is. It is a potential hazard for any property owner but if it occurs, it is thankfully relatively simple to deal with and resolve.

Malicious damage comes in many forms and many degrees of severity, from simple graffiti or glass breakage to the more extreme end of the scale, such as robbery or arson.

Burglary, Malicious DamageIn all cases, the extent of damage should be determined by a professional loss assessor before an insurance claim is made.

  • The first step you should take when malicious damage or burglary is reported or discovered is to ensure that the building is safe to enter. Inform any employees or others who will need to be aware of the situation and if the damage is particularly extensive, do not open for business until you are certain that no further damage will be caused by doing so.
  • Next, call the guards. Try to leave everything exactly as you found it – avoid moving items or cleaning up until after they have visited the site. They may need to gather evidence, dust for fingerprints, and determine the motives and methods of those responsible for causing the damage. If you have CCTV in operation on the premises, have it ready for them to review as this will be essential to their investigation.
  • At this point you will need the services of Clearys Loss Assessors to gain a full picture of the damage caused. If cleaning up and repairs are vital to make the building secure, and the loss assessor is unable to visit the site immediately, take extensive photographs, video, and written inventory of the damage. However, if at all possible you should wait until they have examined the building before beginning any of this.
  • The next step in the process is to make an insurance claim and, depending on the outcome of the police investigation, press charges against the perpetrators. In either case, you will need to keep extensive and meticulous records of the incident including CCTV, photographs and videos, details of repair works, financial losses, etc.
  • Finally, take precautionary measures to reduce the risk of malicious damage or burglary occurring again. If you have not already done so, install an alarm system and camera surveillance, new durable locks, and if necessary, security personnel to man the property after hours.