Decision details

Motion: Protecting leaseholders from excessive insurance and remortgage costs in buildings requiring fire remediation

Decision status: Recommendations Approved

Is Key decision?: No

Is subject to call in?: No

Decision:

Background:This year, we have passed the seventh anniversary of the fire in Grenfell Tower, which burned for more than 60 hours taking 72 lives. The Grenfell fire exposed a crisis of fire safety in high-rise building across our country, with a considerable number of buildings in the Royal Borough of Greenwich being found to have various levels of breaches of building regulations and the use of dangerous materials.

We believe that it is imperative that the developers and owners of all buildings over 18m in need of fire remediation work must be able to proceed with the removal of unsafe material as quickly as possible, and leaseholders should be protected from the costs of this work being passed on through fees and charges.

However, the response to this crisis from the previous Government was woefully slow, piecemeal, and created competing and contradictory safety standards for remediation work that has left residents burdened with high insurance premiums and mortgage difficulties.

 

Motion: This Council notes with deep concern the following:

 

1.    Disparity in safety ratings between developers and insurers

 

Flammable material on homes poses a risk and while we cannot eliminate all fire risks, it is about managing them. The disparity arises from insurance companies and developers having varying priorities and perspectives.

 

In the wake of the Grenfell fire, insurance companies have added the heightened risk of whole block fires in many over 18m buildings. In many cases the risk is too high for single insurers are not able to cover on its own. So, leaseholders have left unable to get cover or brokers have turned to sourcing cover from multiple firms. The latter meaning thatseveral insurers are involved in covering one building, creating a ‘layered’ effect and driving up the cost. 

 

Developers often rely on building regulations and standards that they meet during construction, which may vary depending on the specific interpretation of safety requirements. These ratings can sometimes be less stringent than the criteria used by insurers, who often apply more rigorous standards based on their risk models and the potential liability they face in the event of a claim.

·        Developers are focused on the present safety and adherence to construction standards, while insurers look at potential risks and historical data to predict future incidents.

·        Developers aim to ensure the building is safe from the start, adhering to codes and best practices. Insurers, however, evaluate the likelihood of future incidents and how well risks are managed.

·        Developer ratings are often based on current and immediate safety measures, whereas insurer ratings consider long-term risks and past performance.

·        Insurers are focused on the EWS1 certification process, which is a set way for a building owner to confirm for insurers that an external wall system on residential buildings has been assessed for safety by a suitable expert, in line with government guidance. It is however not a legal requirement to remediate to A1 standard with requirements for fire safety being B1, and this disparity creates confusion and frustration for leaseholders and unfairly increases premiums.

·        There is a risk from flammable materials and the B1 rating have not given certainty to all stakeholders i.e. residents of Royal Artillery Quays and Insurance providers. 

 

These differences in standards creates a gap between what developers consider "safe" and what insurers deem "insurable," resulting in challenges for leaseholders in securing affordable coverage. Although this mitigates the risk for individual insurers, they also escalate overall insurance costs for leaseholders, further exacerbating the financial strain on residents.

 

Council Calls upon the Government to:

 

1.     Act upon the findings of the Grenfell Inquiry.

 

2.       Bring forward a review how to better protect leaseholders from costs and take steps to accelerate the pace of fire remediation across the country. It is imperative that this review considers the findings from fires in Barking and Dagenham and determine what is acceptable on buildings, with a view of ruling out flammable materials. It must provide clarity for residents on if an A1 rating is necessary to ensure the highest standards of safety.

 

3.    The Government should back a risk-pooling reinsurance scheme to help ensure quicker and more substantial reductions in the costs paid by leaseholders.

 

 

Publication date: 30/01/2025

Date of decision: 29/01/2025

Decided at meeting: 29/01/2025 - Council

Accompanying Documents: