Property Owners in Ireland Find Themselves in a Fix as Insurance Crisis Looms Large

Posted 4 months ago in More

DDF 2021 – Desktop

Business owners in Ireland are facing a unique challenge as most insurance companies have stopped providing any kind of insurance cover for a specific kind of cladding.


This cladding is quite commonly used across the country in homes and buildings. The turndown for insurance cover is even more outright if the properties’ external wall structure contains products such as polystyrene.


Why Insurance Companies are Denying Insurance Cover

The decision to exclude polystyrene products seems even more bizarre because such products already have the safety nod if they are properly used in buildings that are up to a height of 18 meters. While this move by insurance companies has certainly taken aback almost every property owner, there is a sound reason why insurers are denying coverage.


According to insurance sources in Ireland, the 2017 Grenfell Tower disaster in England, which led to the deaths of 72 people, was caused because polystyrene was used in the building. On 14th June 2017, the 24-story Grenfell Tower in North Kensington went up in flames.


Grenfell Incident Merely an Eyewash

While insurance companies have openly expressed their inability to provide insurance cover, many business owners have alleged that insurers were merely using the Grenfell Incident as a pretext to wriggle out from paying any insurance. The former president of Irish Hotels Federation, Michael Lennon, openly criticized insurance companies for their refusal to cover businesses, which had already been struggling to make ends meet during the pandemic.


He said that insurance companies were acting like they were a law unto themselves. Ruling out any similarities with the Grenfell incident, he warned that if the situation persists, it could create serious trouble for business owners. He feared that if removing the cladding were to become mandatory for businesses if they wanted to qualify for the insurance cover, they might have to spend a substantial amount of money. According to Lennon, businesses might have to spend amounts that could be as high as 10 percent of their business.


He said that the sudden move by insurers was inexplicable as the same insulation is used in almost every house in the country and every insurance company in Ireland from AXA to the AA had been providing cover for the insulation. Lennon further rued that it was already bad enough that businesses were not being compensated for interruption; the move to stop providing cover for a certified system would make the matter even worse.


Manifold Increase in the Insurance Premium

While many insurance companies in Ireland have out rightly refused to cover incidents related to cladding, others are charging exorbitant fees for the same. Business owners have reported receiving quotes that are 15 times as high as the normal cost for only 50 percent of the cover along with a huge excess amount. Business owners have said their businesses cannot sustain such drastic increase in costs.


Cladding a Concern for Property Owners

Ever since the tragic incident at the Grenfell Tower, insulation materials in buildings has become a particular area of concern for most property owners. Investigation into the Grenfell Tower incident revealed that the fire barriers in the air cavity behind the cladding were absent. While polystyrene is a combustible material, it can quell a fire if it is properly attached to buildings. The insulation material is generally attached to the wall of the building and covered with a cement render.


Issue Brought Up with Central Bank and Finance Minister

Sources say that the issue has been brought up with the Finance and Central Bank Minister, Paschal Donohoe. The director of Alliance of Insurance Reform, Peter Boland, said that the use of polystyrene had become a problem in almost every country after the Grenfell disaster. However, the problem was exacerbated in Ireland because of the huge level of damages that insurance companies provided in comparison to other European countries. He, however, cautioned that many sectors would be unable to recover from the toll they took from COVID-19 as they won’t be insured.


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