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Not a day has passed without reports concerning the horrific Grenfell Tower fire. The event itself was horribly tragic with loss of life, home displacement and huge emotional trauma for those involved.
Such high profile events are particularly difficult to manage as an insured, insurer and reinsurer. Trying to establish what is true and false in the media coverage; the understandably emotionally driven calls for blame to be attributed; as well as the various potential entities and individuals involved looking to position themselves to minimise the risk of liability or involvement in investigations. In addition, there is the political pressure to ensure full insurance pay-outs.
When events of this magnitude occur the entities potentially involved and in the firing line naturally focus on what insurance cover they have available. It is in such circumstances that relationships and policy wordings are tested with lawyers appointed at an early stage guiding those involved. The early estimates of loss and pay-outs range from £200m to £1bn. What is clear is that the claims and (re) insurance position is not straightforward. We only have to look at Dubai where similar issues arose (thankfully without the tragic loss of lives) following the fire at the Address Downtown hotel on New Years Eve 2015.
The Norwegian insurer Protector Forsikring ("Protector") has written the property and liability insurance for the Grenfell Tower. It was the insurer's first major insurance deal in the UK, taking over the risk from Zurich Municipal. Protector won the tender to provide insurance to a tri-borough group of London councils, comprising Hammersmith and Fulham; Westminster; and Kensington and Chelsea. There are a number of issues of focus when it comes to insurance coverage:
Cause of damage. We are told that the fire started from a fridge freezer appliance; questions have been raised over the fire safety facilities in the building; then there is the issue of the cladding which allegedly acted as an accelerant to the fire aiding its ferocity, thereby worsening the overall effect. There are likely to be causation issues arising that will affect how the insurance cover responds and also potentially defective property and design exclusions which might limit the indemnity on the property insurance.
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