Below I reproduce a letter written by Mr Geoff Williams a professional loss assessor for more than forty years which he wrote to one of the BBC’s consumer programs in 2015.

I have redacted names mentioned in the letter because those people have not agreed for their names to be published. Mr Geoff Williams testimony mirrors my horrendous experience at the hands of RSA and Infront Innovations Group.

From: Geoff Williams
Sent: 01 July 2015 16:17
To: ————BBC. Subject: SUBSIDENCE INSURANCE CLAIMS IN UK

Hi —-

Referring to my telephone conversation earlier with your colleague—-, I was hoping that you might ring me so that I could introduce myself and explain that the person called ——- to whom you recently sent an e-mail concerning the above subject is the partner of one of my colleagues who at this stage would wish to remain anonymous for reasons associated with cases which he is currently involved in.

I also sent in an enquiry form from your website but obviously mine does not appear to have been of interest.

However I hope that you will find the considerable information given below of interest.

There is a major problem in the UK insurance world revolving around how subsidence claims are currently being mishandled by some UK insurers and their appointed representatives.

Subsidence in insurance terms basically means downward movement of the ground beneath the foundations of a building. There are variations in policy wordings but that is the basic premise.

When subsidence was first covered by insurers in the early 70’s it was fairly standard procedure to underpin foundations which had moved downwards. That operation basically means extending the base of the foundations downwards to ground which is thought to be sound and unlikely to move further.

However on occasions this was done in a situation where the underlying ground was clay and where the problem had been caused by tree roots removing moisture from the ground resulting in clay shrinkage. The offending tree(s) were sometimes removed also and what unfortunately happened then was that the clay recovered and expanded forcing the building back upwards. This is called heave.

The situation therefore correctly developed into a situation whereby underpinning became more restricted. Decisions had to be made as to whether the ground was likely to recover before underpinning was sanctioned. In the aforementioned example, trees would be removed and movement monitored before repairs would be carried out. Ways of strengthening brickwork by the installation of metal bars between brickwork courses and the attachment of metal mesh to lesser damaged brickwork panels were developed.

Insurers and their loss adjusters/structural engineers dealt with matters properly. Full investigation was carried out and in most cases correct decisions were probably made because they would then issue a certificate of structural soundness which could be produced in the event of the houseowner wishing to sell the property and thus having to disclose that the property had been the subject of previous subsidence.

One gets to the point therefore that insurers were doing their best to deal with such matters properly using qualified loss adjusters and structural engineers – they were at that time treating their customers fairly as required by the FSA at that time, now renamed The Financial Conduct Authority .

Unfortunately a situation then develops whereby certain companies referring to themselves as “validation companies” start to become prevalent. I attach an article written by myself several years ago which highlights the problem – these companies deal only with damage which can be seen as opposed to including hidden damage, often more serious both in terms of immediately necessary rectification work and more importantly damage such as in the case of water ingress which will potentially create a more serious problem such as wood rot etc

Transfer this concept to subsidence claims. In the main water damage as detailed in the article is unlikely to ultimately result in such serious structural damage to a building as to make it unsaleable but that is not the case where subsidence damage is concerned. The most expensive purchase most people ever make is their house and policyholders really need claims concerning structural integrity of their property to be dealt with properly by insurers. Indeed I wonder whether UK building societies who have a major financial interest in UK house stock know what is going on.

So…………..what is going on?

There is a company called the Innovations Group who claim to deal with the majority of subsidence claims on behalf of insurers.

They seem to have total control of the claims handling process. If you complain to your insurer they just pass the complaint back to Innovations to deal with. Why?

Probably because Innovations operate to a business model known as Capped Indemnity Spend model.

My understanding is that under this way of working whenever they are instructed to deal with a claim for an insurer the insurer pays to Innovations a payment currently thought to be about £7000.

They then have total control of the claim and if they could first of all repudiate the claim as not being subsidence damage (bearing in mind that the average policyholder does not understand what subsidence is and therefore trusts their insurers) they will do that and I believe that they were at one time entitled to retain the £7000.

That may have recently been changed on the basis of changes to the agreements which Innovations have with insurers resulting in the process working only where it is accepted that subsidence damage exists and then they are allowed to keep what they don’t spend.

They therefore spend as little as possible but monitor properties, not always correctly, for a period before doing the least amount of repairs necessary and thus pocketing the maximum difference between £7000 and the amount they pay to contractors whom they instruct on behalf of insurers.

At one time they apparently used to repudiate claims on the basis that the damage was not due to subsidence and pocket the fee (at that time possibly about £4/4500) despite the fact that the evidence indicated possible subsidence damage and that the situation should at least be monitored – probably in the knowledge that in a couple of years time the damage would become worse and they could then charge another £4/4500 or whatever they had agreed as an increased “spend” in the meantime.

My understanding is that maybe the insurers realised what was happening and that a different agreement may have been reached about repudiated claims.

I come to that conclusion because during the early stages of a subsidence insurance claim they usually now indicate that they are happy that the claim is due to subsidence so that the argument now becomes one of how much repairs will cost.

In my opinion they do monitor damage to see if it is progressive but they do not necessarily monitor what they should be monitoring.

An example is a case I have recently taken on where only one area of damage was monitored when at least three areas should have been monitored.

They then advise that the damage is not progressive when they have monitored only one area. The damage in that area may not have been progressive but what about the other areas? They patch them up and hope that they become/remain stable.

One of their favourite tricks is to advise a policyholder that the insurer is responsible only to consider damage which has occurred during the period that the insurer has been on cover. That is simply not true but the normal average policyholder does not know any differently.

Many years ago the Association of British Insurers realised that there was a problem in that subsidence damage was a progressive problem which might manifest itself over a period of time during which a policyholder might change insurers.

They got most UK insurers to subscribe to an agreement a copy of which is attached from which you will glean that the insurer covering a property for more than two months when damage is discovered is obliged to deal with the claim if there has been continuous insurance and then possibly seek a contribution from previous insurers.

Quite simply this agreement is ignored by Innovations who tell policyholders that they can deal only with damage which has occurred during the currency of the policy when under the terms of the agreement the current insurers should be dealing with the claim – which brings us to another conundrum – is it the insurers who are ignoring the agreement or is it Innovations on behalf of the insurers who choose to ignore it?

I recently met a representative of Innovations on a case where the contractors instructed by them had discovered that damage was more severe than had initially been apparent .

That representative stated that it was not unusual that when for example plaster work was removed that additional work had to be agreed.

I commented that it was not a surprise because they were in the habit of just allowing for what could be seen and not anticipating what the outward signs would indicate. The Innovations representative responded “well that’s what the insurers expect us to do”.

It is therefore a question of whether such organisations as Innovations have sold their services to insurers on the basis of reduced claims spend or whether they are in fact doing what insurers have instructed them to – I suspect the former.

The typical way in which such claims have been dealt with for the last few years by what we believe to be unscrupulous insurers and their representatives is as follows:

1) Repudiate the claim even though it may clearly be possibly subsidence related

2) Reluctantly agree to monitor a property often inadequately

3) If it has to be accepted that subsidence damage has occurred, carry out the minimum repairs in the hope that the problem will not recur/the policyholder will move house

4) If the opinions of the people who exist merely to save the insurers money is not accepted they will refuse to agree to pay for the policyholder to instruct their own structural engineer even when the latter proves that they are wrong

I have become aware very recently that apparently Innovations’s turnover has reduced considerably because, in the words of one of their employees “INSURERS ARE NOW ATTEMPTING TO REPUDIATE CLAIMS BY TELEPHONE WHEN A POLICYHOLDER INITIALLY RINGS THEM TO REPORT A PROBLEM INSTEAD OF GETTING US TO GO OUT AND DO IT FOR THEM”. Repudiating claims without investigation is not treating customers fairly.

On the same day that I found that out I was also told by a structural engineer of my acquaintance that a representative from a firm of chartered loss adjusters, Crawfords, had told him that CRAWFORDS WERE NOW GOING OUT TO SEE DAMAGE WHICH WAS CLEARLY SUBSIDENCE RELATED BUT THEIR INSTRUCTIONS WERE TO REPUDIATE ALL CLAIMS AND SEE HOW MANY POLICYOLDERS PURSUED THEIR CLAIMS. Again not treating customer fairly.

They get away with murder because policyholders still believe that their insurers will look after their interests which unfortunately is no longer the case.

Historically loss assessors who look after the policyholder’s interests in a claim have shied away from subsidence claims because the insurers, when these claims were generally dealt with correctly, controlled the engineering aspect and the reinstatement aspect of such claims by using preferred contractors.

Assessors were not in a position to get policyholders money to spend as they wished which was the situation as far as other types of claim (fire, theft etc) were concerned.

Insurers achieved that position by agreeing to continue to cover buildings where subsidence damage had occurred as long as their preferred contractors who provided appropriate guarantees did the work. This is understandable and this situation protected the building societies’ interests in all these buildings.

Because of this most policyholders do not get any support from professional advisers such as ourselves.

However that is not the case for every firm of assessors. We and other advisers of our acquaintance do regularly get involved in subsidence cases and we believe that the current situation needs drastic action to rectify because quite clearly insurers are not, as set down by the regulatory body The Financial Conduct Authority, treating customers fairly.

If you have any interest in pursuing this situation I would propose arranging for us to have a joint meeting with an assessor from Billericay who has had more experience than I have in the last few years of the activities of Innovations and their instructing insurers and who has at least one client who will probably be more than willing to tell you about that client’s ongoing saga. Should you wish to speak to that assessor he is called —————-

We have a a number of cases at present and I believe that one person in Yorkshire, at least one in LIverpool and another in Blackpool are sufficiently animated to tell their stories publicly

Additionally I have recently spoken with the son of an elderly policyholder in the North East who has done a lot of work on this subject including complaints to the Financial Conduct Authority and the Financial Ombudsman Service as well as the police as he believes that the insurers and their representatives (Innovations) are guilty of fraud.

He has recordings of telephone conversations in which an apparently senior person at Innovations contradicts what has been written by them and indeed admits to not following recommended procedures concerning such matters. He is more than happy to speak with you and he is generally available on ——— on weekdays.

I attach some notes on a meeting held by The Subsidence Forum which organisation is made up of various people involved in the subsidence claims arena such as structural engineers, contractors etc.

Some of the contractors actually work (sometimes reluctantly) for Innovations. The notes clearly indicate that capped indemnity spend models are not consistent with treating customers fairly. You may wish to follow up on that lead although contractors working for Innovations will not wish to put their heads above the parapet.

There is no point in your contacting the Chartered Institute of Loss Adjusters ————-

One might think that the Association of British Insurers, the Financial Conduct Authority and the Financial Ombudsman Scheme might have strong views about this but the truth is that these people do not understand real life at the coal face – they are in ivory towers and not in the front line – and as I think Mr Hunter will tell you, they close ranks in such situations – he’s already been along that route.

There is a nationwide problem of substantial magnitude here. Policyholders have for the last few years at least been getting shortchanged by insurers and their representatives and the situation is becoming worse – a policyholder rings his insurer about what is perceived to be a structural problem with the single most important and costly investment of his life and the insurers do their best to minimize the claims spend by initially trying to persuade them that they will not succeed in a subsidence claim and when that is not accepted by a policyholder then sending out representatives who exist only to save money as opposed to instead of dealing with matters properly and not treating the policyholder fairly.

There are at least thousands of policyholders who have not been treated fairly. Building societies are lending on properties which have not been properly repaired and which should be revisited.

This could in reality be the next “PPI scandal”………………………………

I sincerely hope that you can bring this scandal to the public’s attention

Should you wish to speak with me the best number is 07545 352973

Regards

Geoff Williams ACII FCILA FUEDI-ELAE

Director

Hope and Williams Ltd

4A The Packet House

Barton Road

Worsley

Manchester

M28 2PB

Disclaimer. This reproduced  blog does not constitute legal advice. If you need legal advice consult a lawyer or citizen Advice Bureau or professional independent Insurance Assessors.

Remember Loss adjusters appointed by the Insurance company especially ones on capped/fixed Indemnity spend are spivs not to be trusted.

Jolly Kimeze-Mpanga