Standards Committee Technical Standards Committee Technical
Conference
Agenda Agenda
• Overview of claims costs
• Years 0 ‐ 2 claims and resolutionsYears 0 2 claims and resolutions
• Years 3 ‐ 10 claims
• What are we commonly seeing now?
• An example of what we might see in future?An example of what we might see in future?
• Summary
CLAIM COSTS
Total insurance claim payments in 2009/10 were £68million.
Considering increases in the extent of cover number of policies changes in Considering increases in the extent of cover, number of policies, changes in the economic environment and inflation, costs are in line with expectations.
Insurance claims payments by policy section
£35m
£40m
£45m
p y y p y
Increase in years 3‐10 claims due to introduction of wider policy cover (e.g.
roof coverings, render) and higher numbers of policies on risk
£20m
£25m
£30m
Recent increases in years 0‐2 claims numbers of policies on risk
£10m
£15m
£20m Recent increases in years 0‐2 claims
(insolvency and rule 27) due to economic downturn
£0m
£5m
2000/1 2001/2 2002/3 2003/4 2004/5 2005/6 2006/7 2007/8 2008/9 2009/10
Pre‐completion (S1/1A) Yrs 0‐2 insolvency(S2) Yrs 0‐2 rule 27 (S2A) Yrs 3‐10 main ins cover (S3) Yrs 3‐10 building control cover (S4)
YEARS 0‐2 CLAIMS AND RESOLUTIONS
The most common causes of claims and resolutions in the first two years relate to services and internal finishes the first two years relate to services and internal finishes, although they are less significant in terms of cost.
Y 0 2 f 2009 Y 0 2 t 2009
1 - General Info 3%
4 - Foundations 0%
5 - Substructure
& ground floors 9 - External 3%
Others 2%
Years 0-2 frequency - 2009
1 - General Info Others
5%
Years 0-2 costs - 2009
9 External works
7%
Info
6% 4 -
Foundations 8%
5 - Substructure 8 - Services
and internal
9 - External works
7%
5%
6 - Superstructure
34%
8 - Services and internal finishes
40%
& ground floors 10%
and internal finishes
16%
7 - Roofs 11%
6 - Superstructure
30%
7 - Roofs 18%
11%
Note: the costs chart includes costs incurred by NHBC in respect of insolvency and rule 27 claims, but does not include any costs of builders carrying our repairs on resolutions
Top 10 most frequent causes of claims and
l ti i 0 2 b t d d h t
resolutions in years 0-2 by standards chapter
Standards chapter % of claims and resolutions
8.1 - Internal services 19.9%
6.7 - Doors, windows and glazing 18.8%
7.2 - Pitched roofs 8.7%
6.1 - External masonry walls 8.3%
8 2 W ll d ili fi i h 6 8%
8.2 - Wall and ceiling finishes 6.8%
9.2 - Drives, paths and landscaping 6.0%
8 4 - Finishings and fitments 5 8%
8.4 - Finishings and fitments 5.8%
8.3 - Floor finishes 3.6%
8.5 - Painting and decorating 3.6%
1.2 - A consistent approach to finishes 3.4%
YEARS 3‐10 (SECTION 3) CLAIMS
Superstructure and roofs account for 75% of section 3 claims but costs are split more evenly between
claims, but costs are split more evenly between
foundations, substructure, superstructure and roofs.
Section 3 claims costs - 2009 Section 3 claims frequency - 2009
08 - Services &
Internal Finishes
1%
09 - External Works
1%
Others 3%
04 - Foundations
7%
08 - Services &
Internal
09 - External Works
1%
Others 3%
q y
04 - Foundations
21%
07 - Roofs 22%
05 - Substructure
12%
Finishes 2%
05 07 - Roofs
39%
05 - Substructure
24%
06 - Superstructure
28%
06 - Superstructure
36%
Note: the costs chart includes costs incurred by NHBC in respect of section 3 insurance claims, but does not include any costs where builders have carried out their own repairs
Top 10 causes of section 3 claims in years 3-
10 b b
10 by number
Standards chapter % of claims
7.2 – Pitched roofs 38.2%
6.1 – External masonry walls 20.4%
6.8 – Fireplaces, chimneys and flues 7.6%
5.3 – Drainage below ground 6.7%
6 D i d d l i 4 3%
6.7 – Doors, windows and glazing 4.3%
5.1 – Substructure and ground bearing floors 4.2%
4 2 – Building near trees 2 7%
4.2 – Building near trees 2.7%
4.4 – Strip and trench fill foundations 2.1%
2.3 – Timber preservation 2.1%
4.5 – Raft, pile, pier and beam foundations 1.8%
Top 10 causes of section 3 claims in years 3-
10 b t
10 by cost
Standards chapter Cost %
7.2 – Pitched roofs £8.6m 22%
6.1 – External masonry walls £8.2m 20%
5.1 – Substructure and ground bearing floors £5.2m 13%
5.3 – Drainage below ground £3.8m 10%
4 2 B ildi t £3 6 9%
4.2 – Building near trees £3.6m 9%
4.5 – Raft, pile, pier and beam foundations £2.8m 7%
4 4 – Strip and trench fill foundations £1 8m 5%
4.4 Strip and trench fill foundations £1.8m 5%
6.8 – Fireplaces, chimneys and flues £1.3m 3%
6.7 – Doors, windows and glazing £0.5m 1%
6.4 – Timber & concrete upper floors £0.5m 1%
WHAT ARE WE SEEING NOW?
The most common roof problems we encounter are due to poor mortar … to verges and valleys …
and to ridges and hips
… and to ridges and hips
The most common external wall claims relate to damp penetration due to defects in cavity walls
Failure of external render is another common issue
Dummy chimneys often lack the correct structural support
Inadequate drainage Inadequate drainage
Inadequate drainage Inadequate drainage
AN EXAMPLE OF WHAT WE MIGHT SEE IN FUTURE?
There will be some unknown issues arising from the use of new materials and technologies …
• 6 traditionally built inner city terraced houses with insitu cast concrete
basements
• Domestic hot water and heating
provided by ground source heat pump (GSHP)
• Claim for damp ingress to the basement of one house
• Source of leaks suspected to be either GSHP collection loop entry point into basement or drainage
ti t b f b t ll
Ground source horizontal collection loop,
i i d f t i connection at base of basement wall
service pipes and surface water pipes are under the car park area
What did we find?
• Liquid within ground source loop running at below zero loop running at below zero temperatures
• Condensation forming on internal pipe work freezing internal pipe work, freezing then thawing causing water in basement
• Water service to one house
• Water service to one house frozen
• Ground below car park was fro en to a depth of 900mm frozen to a depth of 900mm
• Storm drain frozen
• Possible frost heave of car park area
What have we learned from this?
What have we learned from this?
• This is only a single issue and there is no suggestion of a more
id d bl b t it id l f i t
widespread problem, but it provides an example of issues to consider, in terms of…
– New investigation techniques – New repair solutions
S itable specialist contractors and cons ltants – Suitable specialist contractors and consultants
– Building up a database of intelligence to identify common failures – Extent Buildmark policy cover
– Providing feedback to help develop the Standards for the future – Developing Inspection methodologies
Summary Summary
• Frequency and claims payments have increased in line with expectations, due to:
– Wider section 3 policy cover (particularly for pitched roofs)
E i li l di hi h f i l i d b ild
– Economic climate leading to higher rates of insolvencies and builders failing to carry out repairs in the first two years
• Issues we commonly see at present are mostly due to site workIssues we commonly see at present are mostly due to site work issues and tend to be difficult to pick up via inspections (e.g.
poor mortar mix)
• The issues that modern technologies, materials and methods bring may not be those that we expect or are familiar with and we are now developing our approaches to dealing with these
