It may be two and a half years since tragedy struck at London’s Grenfell Tower, with a fire killing 71 people, but the embers are still burning ominously over the insurance industry.
According to sources in the sector, quoted by Reuters, premiums for architects and surveyors, as well as contractors, have surged since the event placing many future projects at risk. Indeed insurers are increasingly turning away from cladding – excluding it from the bulk of professional indemnity (PI) policies.
“Professionals are finding it harder to access cover in the UK market and premiums are rising,” one PI insurer told the newswire, stating that “the range varies wildly - from 10% to well in excess of 100%.”
Speaking to the publication, Gallagher construction PI broker David Stocks explained that rate increases had varied from 10% all the way up to 300-400%, with the average at 50-100%. This was backed by a spokeswoman at the Royal Institute of British Architects who outlined that a “doubling or tripling” of insurance premiums was a regular occurrence.
Now it is feared that the struggles to find insurance could impact a host of construction projects with Peter Vindon, the chief executive of The Vinden Partnership, telling Reuters that “I am really fearful that if a building has fire-resistant cladding issues, professionals will be reluctant, or even unable, to become involved.”
With a review into building regulations calling for a “radical rethink”, insurers appear to be questioning their involvement in the construction sector – and some have pulled out of the PI market completely on the back of years of losses. This in turn has led to a rise in prices. Meanwhile, those that remain are often asking clients to fill out increasingly detailed surveys relating to cladding and are often slashing the amount of cover they provide or hiking the excess that the insured is expected to cover.