Those cracks brought about by the damning evidence given to the inquiry in recent months impact both the broader construction industry and, specifically, in matters relating to fire safety. Bear in mind that it is not two years since Dame Judith Hackitt wrote that construction, particularly the construction of high-rise and complex buildings, was beset with problems and was suffering a “system failure” which included:
– ignorance of the regulations and guidance on the part of those who need to understand them
– indifference to delivering quality and the prioritisation of doing things as “quickly and cheaply as possible”
– ambiguity on roles and responsibilities because of decades of fragmentation of design and construction responsibilities
– inadequate regulatory oversight and enforcement by the regulators.
Against that backdrop, should we be surprised that insurers are cautious about providing insurance in this area?
If we overlay the developments that have arisen from the evidence given to the Grenfell inquiry over the last year, what do we see? We see testimony to the inquiry which suggests a sector where reputable and well-established firms providing construction materials appear to pressure their staff to “lie for commercial gain” and product guides were produced which employees agreed were “deliberately misleading and dishonest”.
We see that a building control inspector, no doubt under considerable pressures of work, did not notice that cavity barriers had not been designed around windows to stop flames from spreading and that the cladding material was not suitable. We see that a clerk of works remit was not to check that work met regulations, or matched Architects’ drawings, but that the work was “neat and tidy”.
We see examples of workmanship so poor that the company responsible for installing it admitted that had they seen it, it should have been “ripped out and redone”.
Again, what should we expect the insurance industry to make of these revelations?
They go far beyond ‘simple’ questions of the competence of those undertaking the work, but rather they invite insurers to question whether they can continue to underwrite the entire process of construction and those that currently undertake it.
Whilst insurers are watching and listening to the evidence given to the inquiry and may reserve their own final judgement until the next report is complete, the drip, drip, drip of issues coming to light is visibly having a corrosive impact on insurance sector confidence.
The action that the insurance industry has undertaken has been to pull the traditional levers available which act to reduce the insurers’ exposures. In the next instalment, we discuss the effects on the cover available in this area as well as considering what might be next for insuring fire safety risks.
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