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General Insurance Spring Seminar. Friday 21 May 2004, Staple Inn Hall. Coping with Domestic Problems. Household Help. Spring Seminar 2004. Presented by Susan Ley and Graham Oswald. With input from Uma Baska and Cheryl Russell. Household insurance – what it covers

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Friday 21 may 2004 staple inn hall

General Insurance Spring Seminar

Friday 21 May 2004, Staple Inn Hall


Friday 21 may 2004 staple inn hall

Coping with

Domestic Problems

Household Help

Spring Seminar 2004

Presented by

Susan Ley and Graham Oswald

With input from

Uma Baska and Cheryl Russell


What will this presentation cover

Household insurance – what it covers

Detailed look into specific perils

Benchmarks

Current issues

Audience participation

What will this presentation cover?


Household insurance what is it

The term ‘Property’ insurance refers to both commercial and domestic insurance.

Household is domestic only.

Household insurance provides coverage against loss to buildings and contents from certain perils and occupiers liability

Coverage is to indemnify insured for the loss, subject to any limits or excesses

Indemnity is either - Full Indemnity or New for Old

Household insurance - what is it?


Perils fire

Perils - Fire


Perils theft

Perils - Theft


Perils weather flood

Perils – Weather (Flood)


Perils weather storm

Perils – Weather (Storm)


Perils subsidence

Perils - Subsidence

Photo courtesy of Cunningham Lindsey


Perils escape of water

Perils – Escape of Water


Perils accidental damage

Perils – Accidental Damage


Perils employer s liability

Perils – Employer’s Liability


Perils public liability

Perils – Public Liability


Worrying perils

What trends do you think the claims cost will experience over the next 3 years, compared to the last 3 years, for the following perils?

Worrying perils

  • Accidental damage

  • Escape water through Pitch Fibre pipes

  • Escape water excluding Pitch Fibre pipes

  • Floods

  • Subsidence

  • Fire

  • Public liability

  • Terrorism

  • Other


Worrying perils1

Worrying perils

Survey Results - Prediction of perils which will display the most worrying trends over the next 3 years

Least

Worrying

Terrorism

Other

Fire

Accidental damage

Escape of water through Pitch Fibre pipes

Subsidence

Escape of water excluding Pitch Fibre Pipes

Public liability

Floods

Most

Worrying


Perils subsidence1

Perils - Subsidence

Photo courtesy of Cunningham Lindsey


Perils subsidence2

Perils - Subsidence

  • Movement of foundation due to changing ground conditions

  • Principal cause is soil shrinkage around property

  • Seasonal pattern

  • Reporting of claims tends to move with housing market

  • Average claim size is less than £6,000, but substantial repair work can top £30,000


Perils subsidence3

Perils - Subsidence

  • ABI agreement

  • If claim within first 8 weeks with a new insurer, old insurer pays 100% of the claim

  • If claim after 8 weeks but within the first year with a new insurer, old insurer pays 50% and new insurer pays 50%

  • If claim after a year with a new insurer, the new insurer pays 100% of the claim


Perils subsidence4

Perils - Subsidence

  • Heat wave – summer 2003

  • Times article 11th August

  • Insurers are preparing for a fivefold increase in number of subsidence claims

  • How to fund increase in claims?

  • Insurance Times article 21st August

  • Leading loss adjuster “There will be a blip, but it will not be a huge event

  • This view is backed by the ABI


Perils subsidence5

Perils - Subsidence

Times article 8th April 2004

  • Churchill reported a 300% year-on-year increase in subsidence claims last year, as did Direct Line. RSA also saw a 225% rise in claims.

  • Although many insurers say the increased cost of subsidence claims will not be passed to policyholders, insurance brokers expect an 8% rise in the cost of household insurance policies this year.


Perils flood

Perils - Flood


Perils weather floods

Perils – Weather: Floods

  • Flooding is a growing problem in the UK

  • ABI flood moratorium ended 31 Dec 02

  • ABI issued a Statement of Principles on the provision of flood insurance.

  • Implementation dependent on various action from Government, with an annual review of progress.


Benchmark collection

Benchmark collection


Benchmark collection1

Non subsidence claims - Paid development patterns

Benchmark collection

Source: PwC market data


Benchmark collection2

Subsidence claims - Paid development patterns

Benchmark collection

Source: PwC market data


Benchmark collection3

Non subsidence claims - Incurred development patterns

Benchmark collection

Source: PwC market data


Benchmark collection4

Subsidence claims – Incurred development patterns

Benchmark collection

Source: PwC market data


Current issues

Reinsurance

Flood

Inflation

Current issues


Current issues reinsurance

This graph plots trends in the cost of catastrophe reinsurance cover for the UK property market over recent calendar years. 2003 purchasing patterns are used to calculate the price that would have been paid each year since 1992 for the same cover. The price was then indexed to 1992 values.

Current issues - Reinsurance

Source Benfield Greig


Current issues flood

Norwich Union digital flood mapping

Current issues - Flood


Trends in average cost by peril

Trends in average cost by peril

Source : Norwich Union – based on sub-sections of the household account


Current issues inflation

Current issues - Inflation

Source: RICS / BCIS


Household insurance coverage quiz

The next few slides show some incidents.

Which are generally covered by Householder’s Building and Contents policy?

?

Household insurance coverage quiz


First claim

The owner’s dog escapes from the garden and causes a car accident ?

What about if it is the owner’s horse ?

?

First claim


Second claim

The washing machine breaks down and floods the kitchen, ruining the floor ?

?

Second claim


Third claim

A visitor trips over and injures themselves in your house ?

?

Third claim


Fourth claim

You collide with a pedestrian while out riding your bicycle ?

?

Fourth claim


Fifth claim

You accidentally reverse your car into the house and damage the wall ?

?

Fifth claim


Sixth claim

You lose your wallet ?

?

Sixth claim


Friday 21 may 2004 staple inn hall

Any

Questions?


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