Last September, the International Underwriting Association (IUA) conducted a survey amongst its members which revealed a cautious willingness to underwrite fire safety risks on new projects to remove defective cladding from high rises.
Approximately 60% of respondents stated they would provide a limited form of cover, whilst a further 4% were happy to offer unrestricted protection.
This new model insurance clause will help accelerate the removal of unsafe cladding, encourage a better safety culture in the construction industry, and provide insurers with increased confidence in risk management processes employed by the construction sector.
Developed by the IUA and the Department for Levelling Up, Housing, and Communities for work being completed under the government’s £4.5bn Building Safety Fund, this model clause is now available for underwriters looking to provide professional indemnity insurance for building cladding remediation work.
Commenting on the implementation, Greg Clarke, Levelling up Secretary, has said:
“Our priority is making sure people’s homes are safe and that safety standards are high. Alongside our tough new regulatory regime, this new clause that has been developed with my department will help us do just that.
“We welcome the work of the IUA and the underwriters who are taking a proportionate approach to fire safety cover and I thank insurers in advance for using it.”
Chris Jones, IUA director of legal and market services, added:
“Our new model clause sets out a number of key risk management processes that will ensure work being carried out is conducted within recognised industry standards. This will help improve accountability for safety measures and foster an investment in quality construction.
“The market for construction professional indemnity insurance has been difficult in recent years, reflecting concerns about the potential for historic liabilities to develop into future claims following the Grenfell Tower tragedy.
“Each new risk must continue to be assessed on a risk-by-risk basis, of course, but the clause should provide underwriters with greater confidence to offer effective insurance solutions for future work.”