Underwritten Weekly

Last week, I was on holiday in the New Forest.

Ordinarily, I live by the sea. The sea is cold, which in the hottest week of the year is a significant amenity I chose, with characteristic good judgement, to leave behind. I also had air conditioning installed when I moved into my house – it is, by a considerable distance, my greatest domestic luxury, and I spent much of last week thinking about it with something approaching grief, in a forest, in thirty-six degree heat, sitting next to a hot tub blowing hot chlorine mist into my face.

The summer of 1976 was the hottest Britain had ever recorded. Parts of the south-west went 45 days without rain. Reservoirs were mud. Rivers had stopped pretending. The government, which as a rule waits until a crisis is fully underway before deciding to have a meeting about it, passed something called the Drought Act, and appointed a man called Denis Howell as Minister for Drought.

His job, as best I can establish, was to go on television and ask the nation to share baths.

He was appointed in the last week of August. Within seven days, it rained so hard there were floods. He was immediately redesignated Minister for Rain. He later became Minister for Snow, during the winter of 1978. Denis Howell was, in a very real sense, a government-appointed herald of weather events, delivered directly to the nation approximately one week after it was too bloody late.

But while Denis Howell was sharing his bath with Brenda and waiting for something to happen, something was already happening. Underground.

Most of Britain sits on clay. In 1976, after months without rain, the clay beneath millions of British homes contracted. Silently. Slowly. The ground moved. The foundations shifted. And then, in hallways and kitchens and through living room walls from Kent to Cheshire, a diagonal crack appeared – usually starting from the corner of a door frame or a window, wider at the top than the bottom. Appearing quietly, over weeks, as though it had been there all along and you’d simply failed to notice it.

The walls were trying to say something. What they were saying was: the ground underneath us has moved, and you’d better call your insurer.

And here is where this stops being a story about bad weather…

Subsidence had been included in standard UK buildings policies since 1971. Quietly. At no extra premium. Because at the time, nobody had seriously modelled what it might cost. It was considered a minor peril. A footnote. An afterthought tucked inside a policy that nobody read, insuring against a risk that nobody expected.

The summer of 1976 was, for whoever wrote that footnote, a very expensive education.

The claims didn’t all arrive at once. That’s the particular quirk of subsidence: the ground moves in summer, the cracks appear in autumn, the damage is assessed in winter, when the clay, now absorbing the rain, swells again in spring – sometimes partially closing the cracks, sometimes making things considerably worse. The market had priced a peril that moved at the speed of geology, and now it had to pay at the same pace.

In November 1976, at eight minutes to midnight, the House of Commons finally got around to discussing what the drought had done to people’s homes. An MP from the Isle of Wight told them about a young couple who had spent five years renovating a Victorian semi, only to watch cracks spread from the house next door into their own. The structural engineers inspected both properties. Neither was smiling. Both houses were considered beyond repair.

A claim was made. The market, which had never been asked to handle anything like this at scale, handled it. It did not make every problem disappear, because insurance rarely does. But the couple who had spent five years building their home had someone already in their corner before the crack appeared – someone who had, years earlier, decided that the word subsidence belonged in the policy, and put the promise there before anyone understood quite how expensive that promise might become.

The government, for what it’s worth, offered a leaflet. Published free of charge by the “Building Research Establishment”. How fun do they sound.

What came out of 1976 was an entirely new discipline. Geospatial soil mapping. Postcode-level clay risk modelling. Underwriting criteria built not around what sits on the surface, but what the ground is made of underneath. The market learnt to read the earth the way it had always read the sea – as something with moods, and memory, and a very considerable appetite for claim payments.

And because it did, the next person who stood in their hallway in a hot summer – in 2003, or 2018, or last year – looking at a diagonal crack from a window frame, head tilted slightly, wondering whether it had always been there – already had someone who’d thought about them. Not after the crack appeared. Before the summer started. In a room on Lime Street, with a map of Britain’s clay soils and a pen, pricing the risk of a wall that hadn’t moved yet.

The ground remembers every dry summer. So does our market.

Have a good week.

Rob

P.S. The hot tub, for the record, is genuinely lovely. I am an idiot, but a comfortable one.