In the very early hours of 14 June 2017, fire started in the 24 storey Grenfell Tower in West London. By the time AIRMIC delegates were arriving at the 2017 conference in Birmingham, the news headlines were full of horrific pictures of what transpired to be the deadliest structural fire in the UK since the Piper Alpha disaster. By the time the fire was fully extinguished, 60 hours later, it had claimed the lives of 72 residents.
The ramifications have been enormous, with critical focus ranging from how society values safety in the context of affordable housing, the efficacy of the emergency services’ response and whether the Building Regulations regime remains adequate given the development of new construction techniques and materials.
On 3 June 2019, Marsh JLT Specialty, supported by the law firm, CMS Cameron McKenna Nabarro Olswang LLP, delivered a workshop to delegates attending the AIRMIC conference in Harrogate. This interactive event considered the following construction risk and insurance issues arising from the tragedy that took place:
The impact on Building Regulations and construction standards
The changing risk profile for contractors
Considerations for building owners
Consequences for the construction insurance market and how AIRMIC members should respond.
Following an overview of the incident, its aftermath and the investigations to date, the experts discussed some key issues arising from the responsibilities and liabilities of organisations involved in building projects and their regulation; government, owners, consultants and contractors.
We also invited delegates to propose specific construction risk management recommendations that should be made to organisations embarking on building projects or owning property that involves cladding or fire protection risks.
The workshop concluded with a review of current insurance market conditions for construction liability, professional indemnity for contractors and property risks. The experts provided practical advice to risk and insurance managers as to how their construction indemnity insurance can best be managed following recent changes, not all of which are as a consequence of the Grenfell tragedy.
AIRMIC Workshop Delegate Response
It was accepted that building owners, contractors and consultants had all contributed to the situation that now faces the industry in relation to ACM cladding and fire protection systems. However there was particular focus on the role played by government. The key discussion points can be summarised as follows:
- There were concerns expressed as to the sustainability of the current construction market. Major tier 1 contractors have been suffering financial distress with Carillion being the egregious example. Unfortunately there are other businesses which are also struggling with levels of risk versus very low returns. The state procures a huge amount of construction work and delegates were concerned that public sector projects were awarded with an excessive focus on cost, particularly through the ‘value engineering’ process. Delegates felt that this had created an environment where quality, and consequently safety, had been compromised.
- The issue of governance of quality and safety was also extensively discussed, particularly in the context of building regulations. The enforcement of these regulations has been effectively privatised for some time. Delegates expressed the view that this change, over time, had detrimentally affected the quality of the end product, with a corresponding effect on safety.
- In the aftermath of the Grenfell tragedy Building Regulations in relation to fire safety have now changed. Delegates were concerned that previous fatal incidents involving ACM cladding on tall buildings, both in the UK and overseas, had not been acted upon. It was noted that Building Regulations in Scotland had already been changed following a serious fire in 1999. There was also surprise that the new regulations do not apply to hotels.
From a practical perspective, there was resounding support amongst all delegates for a risk-managed approach to fire safety in existing buildings. Delegates also advocated the assessment of risk in the context of a building’s location, environment, purpose, fire strategy and fire safety objectives.
This was a popular workshop and we were unable to accommodate all of those who wished to attend. If you are interested in participating in a follow-up workshop over the coming months please make contact with…
Nigel Hitchborn, Kier plc – Head of Insurable Risk
Dave Cahill – Marsh JLT Specialty – Construction - Divisional Business Development Leader
Mike Johnson – Marsh JLT Specialty, Contractors Team Head
Andrew Harrison-Sleap – Marsh JLT Specialty, PI Team Head
Trevor Fairweather – Marsh JLT Specialty, Senior Partner, European Real Estate
Monica Lesny – CMS Cameron McKenna Nabarro Olswang, Solicitor
Make construction insurance and risk management work harder for your company
- WATCH: Construction Professional Indemnity Market Update – Find out how a hardening PI indemnity insurance market could affect your business, in this short video.
- READ: Discover how to manage the risks related to new technology, 3D printing and other modern construction methods. Download our whitepaper How Do You See the Future of the Property Industry?
- READ: How To Future-proof Your Project – Find out how a spate of high profile new builds with structural defects highlights the need for specialist latent defects insurance.