The following is reproduced, with permission, from the executive summary of the Association of British Insurers Research Report No.1:

"Subsidence - A Global Perspective"

Introduction

In 1999 the Association of British Insurers (ABI) launched a new Medium Term Research Strategy for General Insurance. This had the dual aims of establishing sound information on which ABI can represent member companies' interests, and providing member companies with up-to-the-minute guidance on issues that affect their business. This is a summary of the first report to come from the research programme for 1999-2000.

Summary

"Subsidence - experience of other countries" was researched by Richard Radevsky of Resolve International Ltd (loss adjusters) and managed by the Loss Prevention Council (LPC) on behalf of the ABI.

The project was designed to find out the extent of the problem of subsidence in other countries and how it is dealt with from an insurance perspective. The report also gives a possible insight into the potential of climate change on subsidence in the UK in the near to medium term future, since the countries studied are currently experiencing drier climates than in the UK.

The research was conducted over a 6 month period. There was an initial literature search of subsidence related papers mainly using the internet and conventional library sources. This was followed by visits to relevant experts including those at the Building Research Establishment. The outcome of the first part of the work was a scoping study that was used by the researcher as a baseline document for the next stage of the project that involved visits and interviews with key personnel.

Visits to Australia, South Africa and the USA were made. These were designed to understand the nature of subsidence in each country, both how builders and architects deal with the problem before the event and how householders and insurers deal with the aftermath of subsidence incidences and related claims. During these visits the researcher met with underwriters, loss adjusters, building surveyors and related contractors. Site visits were also undertaken to see the subsidence problem in each of the countries.

A short visit was also made to France to compare and contrast the global study with a European case study.

Key findings

The major findings of the report were:-

• Subsidence occurs all over the world where shrinkable/swellable clay exists, especially in climates that experience extremes of drought and intense rainfall events;
• The big difference lies in the way that the UK insurance market deals with subsidence since the drought of 1976. The rest of the world seems to take a more pragmatic approach to subsidence both in terms of offsetting its occurrence in the first place and in dealing with the effects when it does occur. In the UK, expensive solutions are often undertaken, backed by insurers;
• To offset the onset of subsidence in the first place other countries seem to have created many engineering and building design techniques to reduce or completely negate the occurrence of subsidence. This includes the practical practice of building houses on floating concrete bases rather than deep and thin foundations;
• Many other radical design features were discovered in the other countries, more details of these are given in the report;
• If subsidence does occur in other countries it appears to be dealt with more practically. In many cases small cosmetic cracks are not covered by insurance and are repaired by householders as part of normal decoration;
• If greater remedial work is required then options other than underpinning are employed. These are detailed in the report;
• Insurance cover is not always available for subsidence in other countries. Where insurance cover is not available, funding for underpinning and other work is covered by the householder, sometimes by raising additional mortgages;
• Generally, the tolerance for subsidence-related cracks in buildings is much higher outside the UK. People in the UK are very concerned about even minor cracks and it can affect the saleability of houses;
• In France, the Government have chosen to underwrite the subsidence risk by creating a national pool for subsidence related claims. Due to a surge of recent claims into this pool, the French Government are facing a potential national problem in the area of subsidence underwriting.

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  P.G. Biddle comments:

1. The full report provides an interesting insight into problems from both subsidence and expansive clay in various countries.
2. In particular it emphasises that, although the levels of damage in the UK are usually less than elsewhere, our perception of the significance of damage is far worse and our costs of rectifying it are far greater. [5].
3. It is interesting to note that in South Africa most insurers have progressively removed subsidence cover, by adding exclusions and through their interpretation of policy coverage. As a result, although they have a similar scale of subsidence, the level of awareness and concern among the general public is low. I have suggested a similar withdrawal of subsidence insurance, and that cover should include a minimum level of damage [346].
4. Australia has never had insurance cover for subsidence or heave. In some cities there are considerable problems. However, owners accept the presence of large cracks, which in the UK would cause considerable disquiet and render a house uninsurable, unmortgageable and unsaleable.
5. Remedial measures in the various countries are generally similar to those in the UK, but with less emphasis on underpinning, except in the USA where most problems are caused by heave of expansive soils.
6. The report describes an interesting remedial system aimed at retaining trees which is sometimes used in Australia:
   "Drill holes into the soil with an auger approximately 1.5m deep and close to the wall which has subsided and cracked. Into these holes is poured water to constant level to get moisture back into the soil, and also copper sulphate or other root suppressant chemicals to repel the approach of the tree's roots."
   This combines my suggestions [290-291] for chemical root barriers and accelerated recovery by watering-in. I have reservations about the use of copper sulphate, but it is an idea which would justify further investigation and might have useful applications, particularly where there are valuable trees in the same ownership as the damaged property.