A Simmering Insurance Trauma – The Grenfell Legacy
Tucked away out of sight of the Covid-19 Pandemic trauma is another simmering insurance trauma of potentially gargantuan proportions affecting everyone involved in the ‘built environment’.
A Commissioned Report
Flaxmans were recently commissioned by Wren the Architects Mutual to examine the status of professional indemnity insurance for architects in the wake of the Grenfell fire and subsequent inquiries. The report recently published is now being widely circulated as it identifies what could become one of the most significant uninsurable risks in the history of insurance.
The Insurance Trauma
Many residents of high-rise blocks, especially those above six storeys occupied by Social Housing have felt unsafe ever since the appalling tragedy of the Grenfell fire.
Local authorities, perpetually strapped for cash, have obligations to house people in the available buildings in the knowledge that the Grenfell fire inquiry and the Hackitt report have exposed weaknesses in the built environment to which there are no immediate answers; because remediation costs money; and takes time. They also know that accountability for poor building standards has been ‘someone else’s problem’.
Lack of funds has also paralysed freeholders and leaseholders in private developments leading to residents’ committees looking for someone to blame for their plight.
This poses a serious problem for the insurance industry. Insurers are often seen by society as willing to ‘take any risk if paid enough money’ and the construction industry relies upon that source of easy risk-transfer to enable it to build with relative impunity. Insurers are beginning to kick back and the availability of insurances for construction professionals, in particular, is now in increasingly short supply.
Commenting in the report Roger Flaxman, Chairman of Flaxmans said “It is reasonable to assume that if no perceptible change is made by the industry or by government in controlling the standards of building control and the moral hazards directly associated with cost-driven tendering then the PI insurance Market may eventually be obliged to withdraw its support for the professionals involved in it.’”