What lies beneath: Managing uncertainty in tunnelling claims

No matter how advanced tunnelling technology becomes, one fundamental challenge remains: You never know exactly what lies inside a mountain until you begin excavating.

That uncertainty shapes how tunnels are designed and built. As conditions become clearer, the construction approach may need to change. And when a loss occurs, separating those necessary adaptations from the work needed to reinstate insured damage isn’t always straightforward.

For claims teams, the damage is only one part of the picture. What was expected, what was actually found and how the project responded can all matter when evaluating the loss.

Planning for the unknown

Long before excavation begins, teams start building a picture of what they expect to encounter underground. They study the proposed alignment to identify rock formations, soil layers and groundwater conditions that could affect the work.

This can involve drilling boreholes to collect samples for laboratory testing and using geophysical surveys to help identify changes in underground formations. Together, these methods can reveal a great deal about what lies beneath the surface, but they cannot identify every local variation, discontinuity or groundwater pathway. A borehole, for example, only captures what’s present at one particular location.

As excavation progresses, teams learn more about the conditions ahead. Engineers and geologists use face mapping, probe drilling, groundwater measurements, and convergence and settlement monitoring to compare what they find with what was anticipated in the design. What they learn helps determine what happens next.

This flexibility is central to methods such as the New Austrian Tunnelling Method, often summed up as “design as you go.” That doesn’t mean improvising. Teams set out support classes, trigger levels and response procedures in advance, then choose the right response based on the ground they actually observe.

In other words, the construction approach is expected to evolve as the ground reveals itself. That ability to respond is essential to tunnelling, but it can also complicate the claims that follow.

When damage happens underground

Tunnel projects can encounter a wide range of geotechnical hazards, including cave-ins, sudden water ingress, gas explosions, squeezing ground and rock bursts, as well as landslides and slope failures near portals.

These events may damage the works, construction machinery and surrounding property, while also creating delays and additional costs. But encountering difficult ground and adapting the works in response doesn’t necessarily mean insured physical damage has occurred.

Contractors’ all risks policies generally focus on sudden and unforeseen physical loss to the contract works, while construction plant and machinery policies may apply to scheduled equipment such as a tunnel boring machine (TBM). How a damaged TBM is insured depends on the policies in place. 

That difference becomes particularly important when tunnel-specific endorsements come into play. Munich Re Endorsement 101, for example, distinguishes between the costs of completing or adapting the original works and the measures needed to reinstate damaged insured property.

Alterations prompted by unforeseen ground conditions, general ground improvement, ordinary dewatering, preventive works and TBM abandonment or recovery costs may not be indemnifiable under the endorsement. Reinstatement following insured physical damage may be, subject to its terms and limits.

That’s why the final repair bill only tells part of the story. Claims teams also need to understand why the work was needed: Was it required to reinstate insured damage, or to adapt the construction approach and complete the tunnel?

When geology changes the plan

Taiwan’s Hsuehshan Tunnel shows how far adaptation can go. Pre-construction investigation identified faults and fractured zones containing groundwater, but it could not establish whether those zones were interconnected or how much water the fracture network held.

A smaller pilot tunnel was dug to provide more detailed information about conditions ahead of the main tunnels. As excavation progressed, it revealed a far more difficult environment than anticipated. Water inflow averaged approximately 10,000 tonnes per day, equivalent to four Olympic-sized swimming pools.

Progress was repeatedly disrupted. During the first four years, the pilot TBM became trapped 10 times and advanced only about one kilometer. Engineers eventually developed a bypass-tunnel approach, excavating ahead of the trapped TBM to allow drainage, cutter replacement and ground improvement before mechanised excavation resumed. This became known as the TBM hybrid method.

The project ultimately took 15 years rather than the six to seven initially expected, while mounting losses also changed how insurers viewed the risk. Insurers paid out more than USD 9.3 million on the pilot tunnel — more than 10 times the premium collected.

Afterward, local insurers and major reinsurers declined to cover the extended construction period, and the two main tunnels went ahead without insurance protection.

Tracing a tunnelling claim backward

Hsuehshan shows how changing ground conditions can complicate a tunnelling claim. As the geology revealed itself, construction methods changed, costs mounted and the project looked very different from what was originally anticipated. 

To evaluate a loss in that context, claims teams must trace the project history backward. Geological records, excavation-face observations and monitoring data can help establish what conditions were known, what was subsequently encountered and how the project responded.

That chronology can help separate sudden physical damage from progressive deformation or the ordinary response to conditions already identified. It can also connect the resulting costs to the circumstances that gave rise to them and help determine whether they’re reasonable and proportionate to the damage sustained.

Preparing for what lies ahead

Tunnelling will always involve some uncertainty. What matters is how that uncertainty is managed, monitored and documented as the project moves forward.

The clearer the record of changing ground conditions, construction decisions and resulting work, the better equipped insurers and claims teams will be when a loss occurs. That history can provide the context needed to understand what happened, why costs were incurred and how the claim should ultimately be evaluated.