Statistics from Zurich’s Property Investors Unit highlighted the top claim drivers for commercial landlords and managing agents for 2004-2006.
During this period the escape of water has cost an average of £1,760 per incident in settled claims with burst and leaking pipes, leaking domestic appliances and boiler and radiator defects on the premises the top three sources.
Malicious and accidental damage claims were also consistent over three years (responsible for one claim in ten year-on-year). These gave rise to an average cost of just over £1,000. Burglary and theft rates, however, witnessed a slight decline, from one in ten in 2004 to below this in 2005 and 2006.
Over the last three years storm damage has resulted in average claim costs of over £2,000 per incident. 2005 brought the highest frequency of claims over the three years for this type of peril (at one in ten).
Loss incurred by fire prevailed as the most significant single cost averaging £10,500 per settled claim, despite ranking seventh in terms of frequency and accounting for 3 per cent of settled claims over three years. Claims citing arson as a cause accounted for just under a third of those settled over three years in respect of this type of peril.
Richard Elliott, head of Zurich Property Investors, said: “In our experience many of the disasters that strike property owners and tenants could be prevented by tightening up on procedures. Whilst the majority of losses are insured, the business interruption from an incident such as fire or escape of water can really impact on a business’s ability to bounce back healthily.
“The environment in which we operate is constantly changing. The introduction of the new Regulatory Reform (Fire Safety) Order and the recent ABI report on the increased need for flood defences highlight the growing need for UK investors to be proactive in identifying and managing risk. We are working with others to try to ensure government spending on flood defences is adequate to meet the growing challenges posed by climate change as recently outlined by the Stern report. Zurich advises investors to seek every assistance in understanding flood risk and their responsibilities with regards to the new fire legislation, via a risk management expert.”
