Author: Colum Tudball, Director of Major Loss Operations, Woodgate & Clark
A version of this article first appeared in Insurance Edge, May 2025.
It has been eight years since the horrific Grenfell Tower disaster which prompted an independent review of Building Regulations and Fire Safety, ultimately resulting in the Building Safety Act (BSA) 2022. As architects, developers and construction companies navigate the new legal landscape, the implications for the insurance claims sector should not be underestimated. As one recent case study has shown, insurance providers and their trusted loss adjusting partners such as Woodgate & Clark, are preparing for the possibility of a lengthy approvals process for repair work on high risk buildings (HRB) and higher claims costs.
A shift in the burden of proof
One of the most fundamental changes introduced by the Act is a shift in the burden of proof. Historically, there has been prescriptive guidance on construction work, requiring box-ticking to sign-off a building at the end of a job. Now though, the Act rightly demands more. ‘Duty Holders’ must demonstrate to regulators that a building has been properly designed, then built in line with that design by competent professionals.
Golden Thread
A ‘Golden Thread’ of information must be created and stored electronically on the lifecycle of a building passed between ‘accountable persons’, who could be Owners, Landlords, Developers and Duty Holders.
Gateways
There are also now several gateways or ‘decision points’ that must be granted for work on HRBs at 3 key stages - (1) before planning permission is granted, (2) before building work can begin and (3) before a building can be occupied. Gateway 2 applications to resolve building defects must include full design documentation; a fire and structural safety strategy; details of how the Golden Thread of information will be maintained; a construction control plan and competence declarations from principal designer and contractor.
Mandatory Occurrence Reporting
There is also a Mandatory Occurrence Reporting (MOR) to the Building Safety Regulator of fire and structural safety concerns in Higher-Risk buildings which could cause a significant risk to life safety.
Buildings of all heights
Given its origins, many still believe the Act applies only to tall buildings. However, that is not the case, its main principles apply to buildings of all heights, albeit in a risk-based and proportionate manner. It is therefore not just insurers dealing with high-rise properties who need to take notice; the Act has broad implications across the entire property insurance sector.
Those companies insuring high risk buildings do need to be extra vigilant, however. The Act includes additional regulations for buildings classed as higher risk (HRB), which are those at least 18 metres in height or 7 storeys AND contain at least 2 residential institutions, a hospital, or a care home.
Unsafe cladding
Unfortunately, unsafe cladding remains on thousands of these tall buildings across England, and as remediation works continue, so do historical defect insurance claims. With the limitation period for claims extended significantly , insurers need to consider their long-term claims liabilities and availability of historical documentation for these buildings.
Protracted Claims
Fire-safety related claims have the potential to be protracted and very costly for insurers. For example, in 2023, the investigation of a water leak in a high risk building (HRB), with non-fire resistant cladding triggered a Fire Service notice preventing occupation of the building for residential purposes. The insured’s agent has been managing a Gateway application for building improvements. The process took almost 1 year to prepare and a further 5 months to receive a decision. The Building Safety Regulator rejected the application stating that documentation, particularly a Fire Strategy Report, was insufficient, generic, and had unrealistic proposals about fire safety.
Meanwhile, insurers have been funding alternative accommodation for all displaced residents since July 2023, at a cost of approximately £100k per month.
Claims of this nature also carry the possibility of significant fire safety upgrades in addition to the replacement of cladding. These might include sprinkler systems, automatic opening vents, refuge points, emergency automatic fire alarm systems or reconfiguration of compartmentation.
For new builds too, the Act significantly alters the landscape of insurance claims in construction by expanding liability and introducing new regulatory requirements.
Increased liability for duty holders
Given the extensive information and documentation required for Gateway approvals, specialist consultants are often needed to prepare and submit applications. These consultants, now assuming new ‘Duty Holder’ responsibilities, will face increased liability, impacting their Professional Indemnity (PI) coverage. This development highlights the growing need for insurers to carefully scrutinise the competence of professionals seeking PI cover, as inadequate qualifications or non-compliance could expose insurers to greater risk in the event of a claim.
Collaboration is key to compliance with BSA 2022
In the long term, the increased scrutiny of the building process introduced by the BSA 2022 should strengthen the entire building control system, enhance safety, and ultimately lower the risk associated with insuring buildings. However, this brief review of the BSA 2022 also highlights the significant burden it places on the insurance sector.
A key role for insurers will be to help clients maintain the ‘Golden Thread’ of information, ensuring that records are secure, accurate, and up to date, which will be critical in defending against claims.
As the insurers adapt to the new requirements, it is essential that they collaborate closely with their loss adjusting partners. Our team at Woodgate and Clark can offer deep expertise in real estate claims and a strong understanding of the complexities of BSA 2022, to support compliance and control claims costs on all buildings including those deemed high risk.
