Following the Grenfell Tower fire in 2017, the negative spotlight on cladding materials had a major knock-on effect for the construction industry, from builders and sub-contractors to architecture firms. Days after the incident, cladding installed on buildings more than 18m in height was called into question by the Government, leading to significant increases in premiums for Professional Indemnity Insurance. Bryan Banbury, Managing Director of leading independent insurance broker Russell Scanlan, discusses the impact on the insurance industry and advises how companies can plan ahead when renewing policies.
Bryan Banbury joined Russell Scanlan in 1988 as an Account Handler for commercial clients before working his way up through the business becoming a Director in 2001 and taking on the ‘top job’ in 2007 after leading the successful MBO. As well as looking after his own clients, Bryan is responsible for the overall management of the business and is also a Director of UNA, the alliance of independent insurance brokers of which Russell Scanlan is an active member.
The insurance market changed radically post-Grenfell, particularly with a significant increase in Professional Indemnity Insurance premiums. The focus on cladding meant that insurers began to perceive any tall building as a higher insurance risk. Some of our clients, who had previously found renewing insurance policies straightforward prior Grenfell, discovered their premiums had increased significantly when the time came to renew. The insurance market for architects has proven to be very challenging, not only have premiums increased, insurers have, on occasions, declined to renew policies or imposed exclusions which take essential cover out.
Going forward, the best way for businesses to deal with changes to insurance premiums post-Grenfell is good preparation. Everyone with a Professional Indemnity Insurance policy has to fill in a proposal form with key information about the company, and this should be completed as early as possible – it certainly needs to be completed no less than 30 days before renewal. If you’ve made any previous claims, make sure you include a precise summary which states all information clearly, and give yourself plenty of time to answer any questions that arise.
Professional Indemnity Insurance policies contain a number of exclusions, and it’s vital for businesses to understand what these exclusions mean. Post-Grenfell, companies in the construction industry require policies covering work they are yet to start as well as previously completed projects. This could potentially leave a company in a difficult position if they are unable to find the right cover by the time their current policy runs out. For this reason, it’s important to make sure you have a very early conversation with your broker or insurer to understand how the work you have previously completed sits within the exclusions of a policy.
The impact of the Grenfell Tower fire on the insurance market is expected to continue for the foreseeable future, so it’s important to build a good relationship with your broker and/or insurer. This will lead to a shared understanding of the risks and sector trends within an industry and help to achieve the best coverage possible.