A growth in fire claims of significant value at timber-constructed properties will continue in the years to come, as the UK continues to grapple with housing shortages, according to BLM and the Institute of Directors (IoD).
The claim is amongst others released today in volume three of BLM’s Macroeconomic Trends Series, a suite of research papers created with economists at the IoD. The papers look at macroeconomic forces and how they will shape the insurance claims landscape in the London Market. This third paper covers property risks.
John O’Shea, partner and head of property damage at BLM said: “For years, government and industry has talked about the need to address the chronic housing shortage. For some a potential fix is to adopt the timber frame method of construction rather than the more traditional bricks and mortar approach.
“However timber frame homes pose particular fire risks given the presence of cavities within the finished structure. Such risks are prevalent both during the period of construction and thereafter. Over the last year we have seen a number of significant, high-value claims regarding timber-constructed properties, and we expect to see more if the government and the market continues to see timber as a solution to the housing crisis. Insurers will need to adapt accordingly.”
The paper looks at property risks in terms of housing and development, as well as property damage – and how macroeconomic trends are likely to impact this area in the future.
John, who led on the development of the white paper, continued: “A property market will always be seen as a bellwether of an economy. While the current picture isn’t particularly rosy – with house prices posting their largest monthly drop in almost eight years in April this year – there are still positives, with international investors still showing appetite for UK property.
“We work across the London Market with insurers, brokers and managing general agents. We are acutely aware of the need to understand how emerging risks will impact the volume and nature of claims – particularly in relation to property. We want this paper to provide the market with a better understanding of future property issues, and how this will affect the insurance space.”
The Macroeconomic Trends Series will continue to cover other key claims categories for the London Market in the coming months. This is the second series of papers from BLM and the IoD, with these volumes building on the trends and reflections identified last time in 2015/16.
Download a copy of the paper here.