It says: “There is increasing evidence that extreme daily rainfall rates are becoming more intense. It is clear that global warming has led to an increase in moisture in the atmosphere – with about four per cent more moisture over the oceans than in the 1970s – which means that when conditions are favourable to the formation of storms there is a greater risk of intense rainfall. This is where climate change has a role to play in this year’s flooding.”
In the short-term, predictions from insured losses from the floods are heading north of the £1 billion mark. These losses mainly predominate from property classes of business, however they will be felt in other markets too.
The contingency market will be asking what this rainfall means for the multitude of outdoor events that take place across the UK every year? Will they be viable? And how will the contingency market react to covering them?
The wet weather has already decimated the equestrian calendar with racing cancelled at Newbury, Sandown and Kempton Park and numerous eventing and point-to-point meetings called off.
And as we move into spring and summer the music festival season will get into full swing. However, some sites are currently underwater and even when floods recede groundwater will remain high and there will be a risk of contamination. With the cost of hosting a major music festival said to be in the region of £20 million, will these events be able to go ahead if the market does not have the appetite to insure them?
So, if you have an event you want to get contingency cover for, what can you do to help persuade your insurers to take the risk? Some of the answers look obvious but will make a difference.
According to Shaun Coyne, Director at Hyperion Adjusters, good drainage is vital in keeping sites usable.
He says: “I think drainage is the single most important factor. Otherwise you have got a site, which has got standing water on it or where the subsoil isn’t good or the water tables are high and you will have problems.
“It is going to depend on the type of subsoil and the ability of water to drain away through that subsoil. Chalk and gravel are good because they help the drainage. Then on mature sites, it’s whether they’ve got drainage facilities in place and if there is somewhere for that water to drain into.”
Coyne says that event organisers and landowners will be looking at soakaways and gulleys as well as slitting the ground to assist in the water being able to drain away from sites.
According to Markel, underwriters should be asking brokers and clients to provide them with vital information that the market has not always insisted on in the past.
Site surveys may well become standard practice in the market. Carried out by independent professionals, these will allow underwriters to assess the risk in the ground the way a review of a sprinkler system would allow them to assess fire safety in a factory building.
Local engineers or soil specialists who have knowledge of the area should conduct site surveys. They can provide information on the levels of the water tables, ability to drain through subsoil and proximity to rivers etc.
Roland Grzybek, Director of Flood Risk Management in Europe at consulting firm CH2M Hill, says: “We are looking at how resilient a site is. We’d be looking at the history and the data of past events and how well those have gone. We’d look at the historical rainfall, what the average is for the time the event takes place.
“That would give us an idea of the antecedent moisture content of the ground in advance of an event so if we did get more rain than expected what the likely affect would be. How would it affect any infrastructure – temporary infrastructure in particular?
“The insurance industry is now saying that if you want to insure your event we’re going to need to see some pro-active resilience put in on your part. I think that’s just very, very sensible.”
Large events such as the major music festivals will already be supplying site surveys, says Martin Goebbels, Director of insurance brokers Robertson Taylor.
He adds: “I think that a site survey benefits the insured as well as the insurer. A site survey would help secure the cover for a client and would also help with the price of cover.
“It would also help with the contingency type cover because if an insurer can see that there are no contingency plans in place and there has been no site survey then it will be a very high price for cover.”
As we move into spring and summer underwriters of event cancellation for outdoor events will need to see evidence of good drainage and a site survey. In addition, insureds should be able to demonstrate contingency plans and a solid risk management strategy.