Insurety's Rob Mayo explained that insurance companies have had to deal with rising costs themselves, with Nigel Glen adding that construction costs have been a major contributor.
Rob said: "[Insurers] have had a hard run, certainly post Brexit. Their investments haven't provided the incomes that they have done historically, and the Financial Conduct Authority require insurers to now hold larger sums of money in reserve to pay claims. That's effectively money that sits in an account that an insurer can't do anything with, so it's kind of dead money. It's just there to cover the insurance liabilities. Costs have also increased significantly. As we've seen on some of the latest sites, the costs of claims have gone up hugely over the last 10 to 15 years."
— Rob Mayo, Chief Executive Officer
Data from The Property Institute suggested that, based on a pool of 108 estates, insurance had increased by 92% across the past five years.
Rob said: "I was quite shocked and upset the perception was that the industry was letting the leasehold sector and property managers down to that extent. The TPI data was based on 108 developments and a number of our clients provided some of the data that was put into that. It became clear that the data our clients had put forward was on their large and complex cases."
Following this, Insurety focused on 8,200 developments that it is responsible for insuring, which Rob described as a "very different picture".
"What it does show is that 18 months after Grenfell, the high rise above 18 meters buildings had a huge increase in premiums," Rob added. "This is early 2019, late 2018, and that's when the insurers woke up to cladding, what cladding was, and what fire safety was in high rise."
