The Association of British Insurers (ABI) has announced that the industry’s Fire Safety Reinsurance Facility has reported a second successful year, with a total of 730 risks securing insurance cover with a total sum of £19.6 billion, up from 703 risks in the previous year.
Launched in April 2024, the facility was created by re/insurance broker McGill and Partners, with support from the ABI and in partnership with the British Insurance Brokers Association.
It was established as an industry intervention to improve capacity in the multi-occupancy buildings insurance market.
By improving capacity, many leaseholders in England, Wales and Northern Ireland, and flat owners in Scotland, who live in high-risk buildings with combustible cladding and fire safety issues can now obtain insurance cover where it was previously unavailable or on better terms.
Last year, the Facility was expanded so that participating firms could cover losses of up to £75 million rather than £50 million.
In its first year, 89.5% of risks within the Facility were covered within the £50 million limit, but the remaining 10.5% would have needed to secure additional insurance to be fully covered. However, since the expansion, 94% of risks have been able to secure full coverage through the Facility, avoiding the need to secure additional cover at an extra cost.
Chris Bose, ABI Director of General Insurance Policy, said, “It’s encouraging to see that the Facility continues to work as intended by improving access to insurance for buildings with fire safety risks. We recognise the significant uncertainty, stress and financial pressures many leaseholders have been living with, and the uptake we’ve seen over the past year shows insurers have been able to offer cover where capacity would otherwise be limited. However, no insurance initiative can fix the underlying problem. The Facility is a temporary measure and remediation to a standard that protects both life and property remains the only long-term solution for leaseholders.”
Steve McGill CBE, Founder and CEO of McGill and Partners, commented, “The continued growth of the Facility demonstrates what can be accomplished when insurers, brokers and reinsurers work together to address a complex challenge and we remain incredibly proud of our pivotal role in its development. The fact that we were able to increase the limits last year was a clear signal of what the Facility could achieve and now we have further data to prove it. This facility has always been a great example of our industry’s ability to come together and find innovative solutions where they are needed most.”
Graeme Trudgill, Chief Executive of British Insurance Brokers’ Association, added, “The latest statistics underline the importance of the facility in delivering more affordable and sustainable premiums for buildings awaiting or undergoing remediation. Importantly, it is helping lessen the financial burden on leaseholders by providing additional insurance capacity, competition and choice to a difficult sector of the market. This positive progress is warmly welcomed by our insurance broker members.”
Aidan Kerr, Head UK & Ireland Public Sector Solutions at Swiss Re, said, “As lead reinsurer, Swiss Re continues to support this initiative that has expanded capacity and enabled more buildings with fire safety issues to secure comprehensive insurance cover while remediation progresses. The Facility is an important bridge to the ultimate objective of making buildings safer and more resilient.”
The post Fire Safety Reinsurance Facility sees £19.6bn of risks secure cover: ABI appeared first on ReinsuranceNe.ws.