Insurers have shown a cautious willingness to cover fire safety risks on new projects to remove faulty coatings from high-rise buildings. About two-thirds of respondents to an International Underwriting Association (IUA) survey said they would provide some form of limited coverage, while an additional 4% are happy to offer unrestricted protection.
But the construction industry has yet to show that it has corrected the shortcomings exposed by the Grenfell Tower tragedy, IUA members say. Responding to UK government concerns about the pace of building coatings remediation, they called for a greater focus on quality rather than cost to make it easier for insurers to provide coverage.
The construction professional civil liability insurance market remains cautious, reflecting concerns about the possibility of historical liabilities turning into future claims. Underwriters maintain a selective approach to new risks, carefully analyzing clients’ safety reputations, their portfolio of work and the risk management processes they have in place.
Three-quarters of survey respondents believe the construction industry has yet to learn from Grenfell. Questions remain about accountability, supply chain management and a “culture of least cost,” the UIA said.
“Underwriters are keen to provide insurance coverage to the construction industry, but clearly seek to select clients who can demonstrate a professional and sound approach to risk management,” commented Chris Jones, director of market and financial services. IUA legal services.
“The Building Safety Bill is expected to help resolve liability issues for safety measures and introduce new rules that encourage investment in quality construction. Yet legislation can also retroactively extend historical liabilities, further hampering insurers’ appetite for this category of business.
“Insurers are still grappling with the development of existing claims and the systemic industry issues exposed as a result of Grenfell will undoubtedly take time to resolve. According to Michael Atwell, chair of the IUA Construction Professional Lines Working Group, there is still a perception that tight margins, pulled by both contractors and their clients, mean the cost is often more. important than quality.
“Insurance capacity, however, is available if the construction industry can do more to explain how it has changed in the wake of Grenfell and also take a more sustainable approach to profitability,” Atwell added. “The industry is extremely fragmented which makes engagement difficult, but we are committed to working with industry and government and look forward to discussing our survey results in more detail. “
The IUA Construction Professional Lines Working Group was established in 2019 to encourage greater engagement between insurers, government, regulators and construction companies. It interviewed 26 underwriters active in the sector in member firms of the association.
About the UIA
The IUA represents international and wholesale insurance and reinsurance companies operating in London or through London. It exists to promote and improve the business environment for its members.
Source: International Subscription Association
Photograph: Smoke rises from a burning apartment building in London on Wednesday June 14, 2017, when a massive fire broke through the 24-story building. Photo credit: TUSEN Photo / Matt Dunham.
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