Following a positive first year, the insurance industry’s Fire Safety Reinsurance Facility (the Facility) has been expanded so that participating firms can now cover losses up to £75 million.
When the Facility was first launched in April 2024, it helped insurers provide £50 million of cover for high-risk multi occupancy buildings with fire safety issues. After its first year, insurers involved in the Facility had identified buildings that would be suitable for inclusion but needed more cover. Following discussions between McGill and Partners, who designed the Facility, and insurers involved, they identified an opportunity to increase the cover limit to help more buildings and leaseholders benefit from the Facility’s support.
Full-year data
In its first year, more than 760 buildings were entered into the Facility, at a total value of £17.1 billion insured. Examples of buildings securing insurance when they would otherwise not have had cover, and some evidence of reduced premiums, shows that the Facility is working as intended to increase capacity in the multi-occupancy buildings insurance market for buildings with fire safety issues.
As capacity increases, this should encourage more competition and improve the availability of insurance for high-risk buildings while remediation work takes place. In turn, this should support leaseholders in England, Wales and Northern Ireland, and owners in Scotland.
The tragic fire at Grenfell Tower exposed critical failures in the building safety regime. As a result, insurers had to reassess their understanding of the risk these buildings posed, and leaseholders have shouldered the financial and emotional burden of living in homes that weren’t as safe as they first thought.
“By establishing the Fire Safety Reinsurance Facility, the industry is working to improve capacity in the market for multi-occupancy buildings and, by extension, support leaseholders. Increasing the cover limit to £75 million is a significant step and I hope this will mean that more buildings and leaseholders can be supported while remediation work takes place.
Hannah Gurga
Director General
The Fire Safety Reinsurance Facility is something we are hugely proud of as a firm. Providing a solution to an issue that was so concerning to leaseholders and challenging for the insurance sector alike, is testimony to the way we do business. The very fact that we have been able to increase the limits is evidence to the success of the Facility itself. This success has enabled us to collaborate with the market to enhance the limits for those insurers who are part of the Facility, allowing greater risk transfer for them and creating further benefits for those involved in the future.
Steve McGill CBE
Chief Executive Officer, McGill and Partners
The Fire Safety Reinsurance Facility continues to play a crucial role in ensuring cover remains available for residents of multi-occupancy buildings, whilst the crucial remediation work takes place. With this expansion of the Facility, even more affected buildings and their residents can have access to the vital protection that insurance provides.
“Swiss Re is proud to be the lead reinsurer for the Fire Safety Reinsurance Facility; it's a great example of how the insurance industry can come together to help solve some of the most pressing problems across the UK.
Aidan Kerr
Director, Public Sector Solutions, Swiss Re
Our members have made active use of the new Facility over the past twelve months and tell us that it is making a real difference, helping reduce premiums in many cases which brings a direct financial benefit to hard pressed leaseholders.
“The Facility is a great example of industry innovation and collaboration to solve a difficult problem. The additional capacity now available will reduce the need for brokers to arrange facultative excess of loss reinsurance, further helping to bring down the overall cost of the placement.
Graeme Trudgill
Chief Executive, British Insurance Brokers’ Association
Remediation standards
It’s hoped that, as remediation work progresses through the government’s Remediation Acceleration Plan and comparable programmes in Scotland, Wales and Northern Ireland, buildings will be safer and pose less of a fire-risk. The intention is to eliminate the need for the Facility all together as buildings can find appropriate insurance through the wider market. However, the insurance industry has long stressed that the only long-term solution to support leaseholders is remediation to a standard that protects both life and property.
In its latest report, ‘Assessing the fire risk of cladding systems: an insurance perspective’, the ABI has worked with the Fire Protection Association (FPA) to set out how the industry assesses the risks facing affected buildings, and how this may go further than the remediation work required under current building regulations. The ABI has called for government to consider its concerns in its remediation activities, and to ensure combustible materials are removed from buildings’ external walls so that fires cannot spread as easily.
Notes to editors
The Fire Safety Reinsurance Facility was created by insurance and reinsurance broker McGill and Partners with support from The ABI, and in partnership with the British Insurance Brokers Association.