The wording has been developed by the International Underwriting Association working in tandem with the Department for Levelling Up, Housing and Communities for use in work being completed under the Government’s £4.5 billion Building Safety Fund.

The Building Safety Fund, of course, was introduced in order to cover the cost of such refurbishment work on high-rise residential blocks over 18 metres.

This new clause will help in speeding up the removal of unsafe cladding, encourage a greater safety culture within the construction industry and provide insurers themselves with increased confidence in risk management processes employed by the construction sector.

The model clause is freely available for use by underwriters who are looking to provide professional indemnity insurance for cladding-related building remediation work.

Greg Clarke, the Secretary of State for Levelling Up, Housing and Communities, explained: “Our priority is making sure people’s homes are safe and that safety standards are high. Alongside our tough regulatory regime, this new clause that has been developed will help us to do just that. We welcome the work of the IUA and the underwriters who are taking a proportionate approach towards fire safety cover and I thank insurers in advance for using it.”

Chris Jones, the IUA’s director of legal and market services, stated: “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 to improve accountability for safety measures and foster an investment in quality construction.”

Jones continued: “The market for construction-related 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 new clause should provide underwriters with greater confidence to offer effective insurance solutions for future work.”

A survey of IUA members conducted in September last year revealed a cautious willingness among them to underwrite fire safety risks on new projects orchestrated to remove defective cladding from high-rise developments. Around two-thirds of respondents stated that they would provide a limited form of cover, while a further 4% were happy to offer unrestricted protection.

The survey was carried out by the IUA’s Construction Professional Lines Working Group, which was established back in 2019 to encourage greater engagement between insurers, Government, regulators and construction firms.

SOURCE