Brokers working to solve cladding cover crisis – White

The Chief Executive of the British Insurance Brokers’ Association (Biba) has said the association is working with the government to solve the crisis in the insurance of the country’s high rise homes amid a cover crunch.

Steve White told Emerging Risks the withdrawal of insurers for the professional indemnity market is threatening to derail the government’s attempts to assess and rectify the threat that cladding poses to the lives of thousands of residents in high rise block across the country.

As the PI market continue to harden, fire surveyors, which are vital in the process of identifying the high rise blocks which are at risks of serious fire are finding it almost impossible to get cover meaning they cannot carry out the task.

The UK government issued an urgent process to identify buildings which were covered with potentially flammable cladding it the wake of the Grenfell Tower disasters in June 2017 which cost the lives of 72 people.

White said: “We have been working with the government for some time to find a solution to the lack of PI cover for fire surveyors. Without the necessary insurance cover they are unable to do their job, to identify those high rise properties at risk and look to how they can be made safe.”

He added: “There is also the issue of accessing insurance coverage for the buildings themselves and it is something that the government is keen to address and we are working hard to find solutions.”

White said the changing risk dynamics in the market has seen Biba now working with several government departments on a range of issues.

These include finding new coverage for the government’s e-mobility schemes including markets to cover e-scooters and their users.

“When I first started with Biba 15 years ago it was very much a one way street when it comes to our relationship with the government,” he explained. “It would be a case of walking down Whitehall knocking on doors. Now it is very much a two way street with the Government looking to work with the industry on a range of solutions to new and existing risks.”

Biba held its annual conference virtually earlier this month and White said the issue of business interruption had been discussed with the result that there was work already underway to explore the potential to create a parametric business interruption solution.

“There has been some discussion around the use of parametric products for areas such as flood but also as a product that can support business interruption risk,” he said. “The potential would be for a simple and clear trigger that would prompt an immediate payment of a set sum.”

“It would likely be a product that sat alongside the commercial combined product and would offer additional protection for those businesses who felt they required it,” he added.

While the matter was discussed at the annual conference there has been more debate in the interim and White said it may again see the broking sector looking to provide a solution.

Biba is also tackling insurers over the current BI indemnity period for replacement and building which is current set at 12 months. Brexit has hit the availability of a wide range of building and other materials and White said Biba is engaging with insurers to look to see that indemnity period extended.

“We think a 12 month period is only suitable for a very small number of cases,” he added. “We have spoken to one insurer who told us that there was a demand for a 12 month period. We believe there is no such demand for a period of that length and it should be extended.

“Brexit has also seen building material in short supply so the period is proving increasingly inadequate.”

He said brokers are working to meet the concerns of commercial clients as COVID changes the way in which businesses operate, with the move to remote working and with it a changing risk dynamic for many.

“We are concerned over the move to the remote working and the impact that will have on sums insured,” he said. “While there has been a move to remoting working firms need to understand the value of the risks they have insured. We are talking to our members and insurers to say there needs to be better communication with commercial policyholders to identify the areas where there is the potential for firms to have left themselves underinsured.

“COVID has changed the market and the role of the broker had become ever more important as the pandemic has coincided with a hard market which has in some ways created a perfect storm.”

Biba is also tackling insurers over the current BI indemnity period for replacement and building which is current set at 12 months. Brexit has hit the availability of a wide range of building and other materials and White said Biba is engaging with insurers to look to see that indemnity period extended.

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