France's Subsidence Claims Surge

France is grappling with a climate-related phenomenon affecting the structural integrity of millions of houses. Known as the shrink-swell of clay soils – which is prevalent across large parts of France – it occurs due to changes in soil moisture content during periods of drought or increased precipitation. Ground deformation can, in turn, lead to property damage, from cracking of house structures to ruptured pipes (e.g. water, gas) and similar.

In 2022, France experienced record average temperature and other exceptionally severe weather events, which generated an unprecedented climate-related loss rate for the whole insurance sector in over 20 years. France Assureurs, the association of French insurance companies, reported a record cost of insurance claims due to the drought-related shrink-swell effect, amounting to EUR 2.9 billion for 2022.

France Assureurs estimated that, over the next 30 years, the cumulative costs of this could triple compared to the previous 30 years.

French Geological Survey identified 48% of the territory of mainland France being at medium or high risk of drought related shrink-swell of clay soils in 2019, up from 24% in 2013. Using this data France Assureurs estimated the number of individual houses in France that are exposed to high or medium risks from shrink-swell of clay soils in 2022.

Ground exposure maps alone offer an imperfect method to assess drought-related shrink-swell risks to property because the information is fixed at the time of publishing the map. which in this case was 2021. Also, not all clay soils behave uniformly even during periods of extensive drought due to differences in consistency, moisture regimes and similar. Value.Space’s satellite-based risk assessments detect ground deformation with millimeter-scale accuracy in almost real-time and is used to identify areas where the shrink-swell effect is actually present, or not.

Figure 1 - Nice City, Official Exposure Map and Value.Space’s Assessment Comparison

• On the left side: most recent geological exposure map showing where medium (yellow areas) to strong (red areas) shrink-swell hotspots are.

• On the right side: Value.Space’s up to date assessment (2023) shows an overview of actual subsidence hotspots.

• Exposure map published in 2021. Value.Space assessment dated 1^st July 2023.

We looked at Nice (Figure 1). On the left, the city is overlaid with a ground exposure map of shrink-swell exposure, as provided by the French Geological Survey. Media reports have conveyed an increase in property damage – doors stuck, cracks in houses – after the exceptionally dry year of 2022. Property insurance premiums in the region have followed suit, with reported increases averaging 33% in 2023 due to consequences of changing climate patterns.

Value.Space also allows zooming in and visualising ground deformation down to the street and house level. The example below shows building level subsidence in Nice for the Palais des Expositions from July 2020 to July 2023 which shows various levels of deformation on the building.

Figure 2 - Building Level Subsidence Visualisation

Climate change is leading to an increase in the frequency of extreme weather patterns. In France, this is directly resulting in a rise in property damage claims within the insurance industry. To effectively respond to the growing risks to their property portfolios, insurance companies require a means to identify areas experiencing ground deformation caused by shrink-swell cycles. Value.Space offers this capability in near-real-time, enabling them to better manage these challenges.

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