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Post Magazine - 29th March 2007
Catch a Fire
Winter 2005/2006 was one of the worst on record for thatched properties. With specialist broker Lark Insurance Group reporting that in some areas, such as Suffolk, the frequency of the thatch fires doubled compared to previous years.
“The reasons for this appears to be a two-fold combination of the long dry spell in the two preceding years and the increasing tendency to use wood burning stoves,” says Lark’s divisional director David Foster.
With the average household claim for thatched properties being so high, Norwich Union says each claim costs around £100,000 compared to just £5000 for standard properties, it was an expensive year for insurers.
Like Mr Foster, Colin Conner, household underwriter at NU, agrees that the high claims year could be down to wood burners becoming more popular. “This combined with a brickwork chimney with an inadequate lining, increases the risk of fire in the thatch, as around 80% to 90% of the heat is transferred from the chimney straight into the thatch,” he explains.
More people have started installing wood burners to make use of sustainable energy sources, but they create intense heat that many chimneys are simply not designed to cope with. Electrical fires, sometimes caused by rodents gnawing through wires in the loft after they are attracted into the warm thatch, can also be deadly. As can the odd freakish accident that puts all properties at risk of fire, such as naked flames in the property or stray sparks from bonfires and fireworks.
However, what makes thatched properties much more vulnerable is that fire has a devastating, and speedy effect. “One spark, and the thatch and roof carcass are gone,” says Jim Walker, chartered surveyor at Cunningham Lindsey. “In a thatch fire, it is usually only the walls that are left standing.”
John Gotts, UK underwriting manager at Hiscox, says that thatch fires are generally out of control within 10 to 15 minutes. “So if the fire brigade is more than about eight miles away, which being in rural locations many are, you are in trouble. Some insurers are now asking how far the nearest fire station is when considering applications,” he says.
If the fire brigade does get there in time, they still have a tough job on their hands to slow the inferno, Iain Farries, household underwriting manager at Holdfast, an underwriting division of John Holman and Sons, says around 90% of thatch fires are caused by chimneys and because these start from the inside out, they are the hardest to put out. “As thatch is waterproof, hosing with water when the fire is inside is less effective than you might think. Mechanical grabs often have to be used by the fire services so they can strip large sections of thatch from the roof to provide a fire break,” he explains.
And this takes a high level of expertise which according to Mr Walker, not all fire brigades have: “It depends on the locality, fire-fighters in Hampshire and Dorset have lots of experience of thatch fires, but if there are few thatched properties in the area, that expertise won’t be there.”
Because thatch fires can be so destructive, it is vital that policyholders take out adequate cover, However, Naomi Glyde, sales underwriter at specialist broker Reedways Insurance Services, says many are caught out. “On the whole, people tend to underinsure thatch properties. Many are listed buildings, which mean that they have to be rebuilt in the original style approved by English Heritage. This can be really expensive,” she says.
Mr Walker adds that the market needs to take a more active role to ensure the right cover levels are in place. “Underinsurance is a huge problem because brokers and insurers tend to rely on the policyholder’s estimation. Properties need to be properly analysed for risk and valued accurately from the outset,” he says.
There are a few clauses that insurers tend to use in their policies to manage risk. “We insist that chimneys are swept at least once a year but recommend that it is done twice, before winter and then between January and March. We also ask that no work such as soldering, happens in the loft space, It’s just common sense really,” says Mr Connor.
However, other “common sense” precautions are not insisted upon and are instead labelled recommendations. “Rodents love thatch, so you can install a mesh on top of the thatch to help prevent them getting in. As there is a risk of rodents chewing electrical wiring, we do recommend that wiring in the loft is in protective casing.” says Mr Connor.
And despite early warning systems to detect thatch fires being available on the market, insurers are not currently encouraging policyholders to use them. There are detectors that can be fitted to various points on the side of the chimney stack to monitor temperature and tell you when to switch off the wood burner. However, none have achieved British Standard yet, so we are not recommending them and won’t do until they reach that standard,” says Mr Connor.
Fire-proof boarding can be effective if it is fitted underneath the thatch, but unless the property is a new build, this means removing the entire thatch, which few property owners are prepared to pay for.
Mr Farries says that more policyholders should be encouraged to invest in this boarding, as it can be very effective in slowing down the fire. “When re-roofing, all old thatch should ideally be removed and fire resistant insulation boards should cover the roof as this could provide an hour’s fire protection to the roof timbers. Raking lit thatch from the roof and dousing with water without the worry of lit that falling into the roof void makes these boards a wise investment.” he explains.
Similarly a new method of thatching called the Dorset model is now used on all new build thatch properties as it helps break the fire between the ceiling and roof. However, older properties prefer to stick with the original thatch, which is never removed completely, but layered higher and higher. This layering can cause another problem, the thatch gets ever closer to the top of the chimney, making it more likely that a spark could land on it and ignite the straw. For this reason, some insurers are insisting that the chimney stands at least one metre from the top of the thatch.
Ms Glide says it is important to talk through these extra precautions with clients. “We tell clients to get their wood burners checked regularly, get smoke detectors in the roof and a fire blanket in the kitchen. It is common for insurers to ask that no bonfires are within 50 metres of the property, chimneys are swept prior to winter use and that there is a valid electrical certificate. However, terms differ. We use a small panel of insurers and each has slightly different conditions,” she says.
Mr Foster believes there should be more of an emphasis on education to help reduce the number of claims and recommends that insurers provide thorough risk appraisals, a service Lark currently provides with its Premier Thatch policy via Lloyd’s.
“Insurers and brokers have an important role to play in educating thatch owners, and particularly first time thatch buyers. A risk appraisal enables the insurer’s representative to meet the client, and discuss the importance of chimney liners, the hazards of wood burning stoves, and detections systems. This also means you can get the sums insured right, meaning the insurer gets the right premium for the risk, and the policyholder is correctly insured,” he says.
Other insurers are also taking a more pro-active approach to risk assessment. Following last year’s increased in claims; NFU Mutual has produced a guide on fire prevention. “As one of the UK ’s largest insurers of thatched properties, we have been urgently mailing the guide to all our home insurance policyholders who live in homes with thatched roofs,” says Tim Price, communications executive at the insurer.
The guide highlights the hazards of using wood burners with unsuitable chimneys, and provides a step by step guide to help thatch owners check the safety of their chimneys. It also provides advice on electrical safety, regular maintenance, and keeping out pests to prevent damage to thatch and electrical wiring.
High claims in 2006 have prompted insurers to take a harder line with policyholders, which for many means premium hikes. “It’s unavoidable that wood burners are becoming more popular, so you need an underwriting strategy to manage the risk, which means reflecting the increased risk in the pricing. You need to look at the individual risk and charge accordingly,” says Mr Connor.
However, Mr Gotts claims that one leading specialist household insurer is hiking prices to discourage new business altogether. “It is trying to get rid of thatched business by charging very high prices so it’s just not competitive. The general trend among insurers seems to be to try to avoid thatch, they are very selective and it seems they are only getting tougher.”
This may mean, says Mr Gotts, that the market will contract, which could in turn mean that some properties seen as particularly bad risks will find it increasingly difficult to get cover. “Property owners will have to take more responsibility for risk management if they are to remain insurable,” he says.
Mr Foster says there are premium increases on most thatch homes, with many insurers saving the big increases for homeowners using wood burners or terraced and semi-detached properties. “The insured property may not have a wood burner but his neighbour might, and it is not easy to get that kind of information,” he says.
There has been a tendency for insurers and brokers to dabble in the market, being attracted by higher premium levels, but then shying away when the first big losses occur. There are also insurers who have been writing thatch business for the long term, but are now uneasy having suffered unusually big losses in 2006.
To sustain business, Mr Foster says that insurers need to look at how they can improve profitability with a combination of selective rates increases, appraisals and better risk management. “There are probably 60, 000 thatched homes in the UK and so it remains an interesting niche, where brokers working with the right insurers can still add value,” he says.
Despite the risk, Mr Connor says the outlook for the market is not all bleak. “Although ‘attractive’ is not a word I would use to describe the market, fires aside, thatch properties offer no larger risks than standard properties and can be profitable business. The average thatched property owner also tends to be older and less likely to change their insurer and this offers some good stability,” he says.
The number of thatched properties remains fairly static, but new properties are being built, meaning there is also new business available. And with a milder winter, there is every hope that the market will not see a repeat of last year’s claims.
Even so, with the profitability of the market dependent on the frequency of fires, there has to be a stronger focus on risk management. Some insurers are already using premium increases, but constant price hikes are unlikely to be sustainable in the long run. Common sense says that the future must lie with a more pro-active approach to fire prevention and detection, so it will be interesting to see whether the major players in the market begin to step up their game in this area.
