Grenfell Tower: Concerns over insurance following last year’s tragedy (Image: Chiral Jon)
A leading insurance broker has warned the construction sector faces “huge increases” in premiums when policies come up for renewal next month, after last year’s Grenfell Tower fire.
“Since the tragedy, there has been huge concern in the insurance market about fire safety and the use of certain types of composite panelling and cladding on buildings,” said Ian Gregory, director at specialist insurance broker MPW, in an article for CM.
“Attention is on buildings over 18m in height, with a focus on aluminium composite material (ACM) panels – the type used on Grenfell.
“Insurers are reviewing their positions and their responses are likely to include huge increases in insurance premiums.”
The Association of British Insurers (ABI) has already expressed its concern about fire safety on construction projects, calling for “much greater clarity on the roles and responsibilities for all those involved” and describing the Hackitt review of building regulations as “long overdue”.
The ABI had warned ministers about the dangers of flammable cladding prior to Grenfell, in a consultation on housing, saying it “can often cause significant fire to spread upwards and between buildings”.
Insurance policies are commonly renewed in April, and Gregory said brokers are now seeing a “very cautious” approach from insurers on cladding and high-rise projects.
“This includes not writing business where any level of cladding is being undertaken, excluding cladding combustibility cover, and not offering cover for contracts working above certain heights,” he explained.
“Insurers who continue to offer cladding cover now require considerably more detailed information prior to placement, which will influence the decision to offer or reject a request for insurance, and may even result in refusal to renew an existing policy.
“It is potentially a very worrying situation for policyholders in the construction industry.”
Meanwhile, the Construction Industry Council (CIC) has launched a joint insurance survey with BuildUK and the Construction Products Association, as part of its post-Grenfell work for the Ministry of Housing, Communities and Local Government (MHCLG) industry response group.
The CIC wants to gather data to support anecdotal evidence that, in the wake of the Grenfell Tower fire, insurance companies are revising terms for professional indemnity and other forms of insurance, which could make it difficult for some organisations to continue to be involved in areas that are deemed higher risk.
The survey can be accessed here.
