Cautious support for building recladding
Source: Middle East Insurance Review | Oct 2021
Insurers have revealed a cautious willingness to underwrite fire safety risks on new projects to remove defective cladding from high rise buildings according to a new survey conducted by the International Underwriting Association (IUA).
A press release by IUA said around two thirds of respondents to the survey said they would provide a limited form of cover, whilst a further 4% are happy to offer unrestricted protection.
The construction industry, however, still needs to show it has addressed failings exposed by the Grenfell Tower tragedy. Responding to government concerns about the pace of building cladding remediation, they have called for a greater focus on quality over cost to make it easier for underwriters providing coverage.
Three quarters of survey respondents feel the construction industry has not yet learnt the lessons of Grenfell. Questions remain about accountability, supply chain management and a ‘lowest cost culture’.
IUA director of market and legal services Chris Jones said, “Underwriters are keen to provide insurance coverage to the construction sector but are clearly looking to select those clients that can demonstrate a professional and robust approach to risk management.
“There is an expectation that the Building Safety Bill will help resolve issues of accountability for safety measures and introduce new rules that encourage an investment in quality construction. Yet the legislation may also retroactively extend historic liabilities, further hindering insurers’ appetite for this class of business.”
IUA chair of construction professional lines working group Michael Atwell said, “Insurers are still grappling with the development of existing claims and the systemic industry problems revealed in the wake of Grenfell will undoubtedly take time to resolve. There is still a perception that tight margins, driven by both contractors and their customers, mean cost is often more important than quality.”
The fire which destroyed the 23-storey Grenfell Tower in London in June 2017 is termed as one of the UK’s worst modern disasters. Seventy-two people died in the fire. M