UK insurers review tower premiums after Grenfell blaze cladding fears

UK insurers review tower premiums after Grenfell blaze cladding fears
The type of cladding used on Grenfell Tower and many other buildings has failed government safety tests and some insurers are now reluctant to cover them. (Reuters)
Updated 23 October 2017

UK insurers review tower premiums after Grenfell blaze cladding fears

UK insurers review tower premiums after Grenfell blaze cladding fears

LONDON: Insurers are considering raising premiums for tall buildings in Britain with flammable cladding panels and no sprinklers or even excluding related risks following the Grenfell fire in London earlier this year.
Inquiries into the tragedy, which killed up to 80 people in the 24-story social housing block in June, are expected to take several years, but property insurers are not waiting for that, or for subsequent changes to the law.
While they cannot change existing insurance cover, renewals, many of which fall due in Jan or April 2018, will give them a chance to adjust prices or policy wordings to mitigate their risks.
Grenfell was coated with combustible panels and had no sprinklers, two factors which experts have said helped the fire to spread. The building’s Norwegian insurer Protector estimated gross property and liability insurance claims of £50 million ($65.87 million).
The type of cladding used on Grenfell Tower and many other buildings has failed government safety tests following the fire and some insurers are now reluctant to cover them, industry experts say, particularly for buildings under construction.
“We have seen some draft exclusions, or partial exclusions, for claims in respect of cladding used on tall buildings where it does not comply with building regulations,” Andrew Rose, claims specialist at insurance broker Miller, told a recent industry briefing.
Rose added this was “something which certain insurers have put forward in relation to their renewals for construction operations,” without specifying the insurers.
Insurers who spoke to Reuters, however, said they were not planning to exclude cladding.
“We should not be relying on exclusions, we should be looking at the property, giving advice, making recommendations,” David Williams, technical director at AXA said. AXA is one of the biggest insurers of large properties in Britain. Others include FM Global, Zurich, Allianz and Aviva.
Williams said AXA had upgraded its administration so that information on the number of tall buildings it insures or the type of cladding they are using is more easily available, helping to identify risks quickly.
Zurich Municipal has recommended its clients review their fire risk assessments and said its “strong recommendation” was the use of fire resistant or non-combustible insulation.
“We will not be withdrawing any existing cover for our customers,” said Allison Whittington, head of housing at Zurich Municipal, adding that the firm would work with customers “to help them manage these exposures.”
Building regulations do not set proscribed standards, lawyers say, leading to greater uncertainty over how to implement the regulations following the fire.
“Interpretation of the building regulations will change,” Catherine Gelder, partner at law firm Berwin Leighton Paisner, told the same briefing.
The Association of British Insurers (ABI), which warned of the dangers of cladding made from combustible material in May, a month before the Grenfell fire, called last week for an immediate end to its use on new and refurbished buildings.
Insurers have also commissioned the Fire Protection Association, Britain’s national fire safety organization, to examine issues including cladding and sprinklers in residential buildings.
Excluding such cladding from policies was one option for insurers, along with other options such as raising premiums, John Ludlow, chief executive of UK insurance buyers’ group Airmic said.
“There are different ways the insurers will deal with cladding — all are justified,” he said. “If you have a property you need to make sure you are responsible — you need to deal with it.”
Insurers previously looked at cladding in the context of overall fire safety, so the risks of combustible cladding panels could be mitigated by other positive factors such as well-fitting fire doors and ample fire escapes.
Insurers and their clients will now be looking more closely at cladding specifically, said Peter Wallace, construction underwriter at Castel Underwriting Agencies.
“We will be drilling down, checking, is this OK?“
Insurers could ask landlords to take down inappropriate cladding at their own expense to improve the safety of their buildings, a move which would cut premiums.
“It definitely affects pricing — it can be cost-effective,” Williams at AXA said.
In contrast, if insurers were unhappy with the level of information they received from clients or the efforts they were making to improve safety, prices could rise, said Jason Cash, divisional director at insurance broker Howden.
“Comments which insurers make will probably be listened to in more detail now than they were before,” he said.
Sprinklers are also a priority for insurers, and instaling them, even into older buildings, can cut premiums.
Chris Johnson, executive vice president at specialist property insurer FM Global, said the cost of fitting sprinklers was “the same as the cost of a well-fitted carpet and underlay, which provides protection and support.”


ArcelorMittal takes over Saudi Arabia’s TAQA's JESCO

ArcelorMittal takes over Saudi Arabia’s TAQA's JESCO
Updated 4 min 58 sec ago

ArcelorMittal takes over Saudi Arabia’s TAQA's JESCO

ArcelorMittal takes over Saudi Arabia’s TAQA's JESCO
  • With the deal, JESCO’s 100 percent ownership has been transferred to AMTPJ

RIYADH: Saudi Arabia’s Industrialization and Energy Service Co. (TAQA) on Sunday sold all its shares in Jubail Energy Services Co. (JESCO) to ArcelorMittal Tubular Products Jubail (AMTPJ).
With the deal, JESCO’s 100 percent ownership has been transferred to AMTPJ, TAQA said in an emailed statement, without disclosing the value of the deal.
Commenting on the sale of stocks, TAQA Chairman Ahmed Al-Zahrani said: “The divestiture of JESCO is in line with TAQA’s 2021 strategy to become a major player in Vision 2030 realization by maximizing the value of local investment and creating a more diverse and sustainable economy. The transaction will result in a much stronger industry in the steel sector serving not only the Kingdom but also the rest of the world.”
The company’s mandate is to lead the way in localizing industries in the Kingdom, supplying specialized equipment, and development of oil and gas resources in the Middle East and North Africa (MENA).
TAQA CEO Khalid Nouh said: “The divestiture of non-core businesses such as JESCO allows TAQA to expand its portfolio through acquisitions of additional services and technologies.” 


Bitcoin tops $41,000 as cryptocurrencies rally after weeks-long downtrend

Bitcoin tops $41,000 as cryptocurrencies rally after weeks-long downtrend
Updated 15 min 1 sec ago

Bitcoin tops $41,000 as cryptocurrencies rally after weeks-long downtrend

Bitcoin tops $41,000 as cryptocurrencies rally after weeks-long downtrend
  • Bitcoin is currently trading above $41,000 and up more than 15 percent over the past week

RIYADH: Bitcoin, the leading cryptocurrency in trading internationally, traded higher on Sunday, rising by 0.02 percent to $41,447.73 at 4:41 p.m Riyadh time.

Ether, the second most traded cryptocurrency, traded at $2,580.98.76, up 5.33 percent, according to data from Coindesk.

Here is a rundown of major crypto news:

Bitcoin is currently trading above $41,000 and up more than 15 percent over the past week. The uptrend continues after the massive sell-off in May and two months of consolidation above the $30K support level, according to CoinDesk.

Germany plans to allow some institutional funds to invest billions of dollars in crypto assets for the first time, Bloomberg has reported.

A law effective Monday will allow so-called Spezialfonds with fixed investment rules to put up to 20 percent of their holdings in Bitcoin and other crypto assets. The funds, which can only be accessed by institutional investors, currently manage about $2.1 trillion.

“Most funds will initially stay well below the 20%,” said Tim Kreutzmann, an expert on crypto assets at BVI, Germany’s fund industry body.

In Ukraine, President Volodymyr Zelensky has signed the Law on Payment Services adopted by the Verkhovna Rada on June 30, the President's administration announced this week.

The new legislation aims to “modernize and further develop” the payment services market, and encourage innovation in the financial sector, according to a press statement.

The National Bank of Ukraine has also given the power to issue its own digital currency.

In an interview with Bloomberg on Thursday, Henri Arslanian, crypto leader at accounting and financial services firm PricewaterhouseCoopers (PWC), explained that crypto firms have high valuations due to the entry of major investors.

He mentioned investment firms and family offices are backed by major venture capitalists, private equity funds, and even some pension funds, and noted smaller venture capital firms are not satisfied with the trend.

Over to the US, Lael Brainard, a member of the Federal Reserve Board of Governors, highlighted the urgent need to develop a digital dollar, speaking to the Aspen Institute’s Economic Strategies Group on Friday.

He cited several reasons for creating a digital version of the US dollar, while the central bank agreed that it will have both international and domestic applications.


Saudi Arabia’s real estate price index rises by 0.4% in Q2

Saudi Arabia’s real estate price index rises by 0.4% in Q2
Updated 01 August 2021

Saudi Arabia’s real estate price index rises by 0.4% in Q2

Saudi Arabia’s real estate price index rises by 0.4% in Q2
  • The report said a 1 percent hike in the prices of residential plots jacked up the prices of residential properties

RIYADH: The real estate price index in Saudi Arabia rose by 0.4 percent in the second quarter of 2021 compared to the same period of the previous year, official data showed on Sunday.
The statistics issued by the General Authority for Statistics showed a 0.8 percent increase in the residential real estate prices in the second quarter while prices of commercial and agriculture properties declined by 0.5 percent and 0.2 percent respectively.
The report said a 1 percent hike in the prices of residential plots jacked up the prices of residential properties.
Meanwhile, the Wafi program, which regulates off-plan property activity in the Kingdom, issued a report highlighting its performance during the first half of the year.
Wafi issued 55 licenses for off-plan sales projects providing 24,328 housing units during the first half of 2021.
Off-plan property sales represent a growing sector of the Saudi real estate market, but some consumers are still wary of developers’ abilities to deliver quality homes on time.
The sector has been steadily increasing its share of total residential sales and data from the Wafi program.
According to real estate consultancy company, Knight Frank, off-plan units represent around 9 percent of total existing housing stock, but a massive 60 percent of total future supply in Saudi Arabia.
Saudi Arabia’s real estate sector is a key and effective economic driver for the country’s gross domestic product (GDP) and is connected to at least 120 industries.
Mortgage lending in Saudi Arabia increased 27 percent this year through May, as interest rates decreased to between 1 percent and 4.9 percent, compared to about 6 percent early last year.
Residential real estate financing contracts offered to individuals by local banks reached 133,006 through May, with a value of SR69.5 billion ($18.5 billion), according to data from the Saudi Central Bank (SAMA).
Real estate financing grew by 50 percent compared with the same period in 2020 when SR46.6 billion was lent via 104,000 contracts.


Saudi net foreign assets jump in June, central bank data shows

Saudi net foreign assets jump in June, central bank data shows
Updated 01 August 2021

Saudi net foreign assets jump in June, central bank data shows

Saudi net foreign assets jump in June, central bank data shows
  • Data from the Saudi Central Bank (SAMA) showed the assets rising by 34 billion riyals ($9.1 billion)

DUBAI: Saudi Arabia’s net foreign assets rose over 2 percent in June, as the global oil industry gradually recovers from the impact of COVID-19.

Data from the Saudi Central Bank (SAMA) showed the assets rising by 34 billion riyals ($9.1 billion) to 1.65 trillion riyals in June from the month before.

Total assets increased by 16.18 billion riyals to 1.842 trillion riyals, the central bank said.


Saudi Arabia’s economy likely to grow in 2021 and 2022, says report

Saudi Arabia’s economy likely to grow in 2021 and 2022, says report
Updated 01 August 2021

Saudi Arabia’s economy likely to grow in 2021 and 2022, says report

Saudi Arabia’s economy likely to grow in 2021 and 2022, says report
  • Capital Economics' forecast a further evidence that the Saudi economic recovery has taken off in 2021

RIYADHH Saudi Arabia’s economy is poised to grow from 2.2 percent to 4.8 percent in 2021 and from 4.1 percent to 6.3 percent in 2022, said a Capital Economics report.

The new forecasts are further evidence that the Saudi economic recovery has taken off in 2021.

At the start of the year, the Kingdom’s Ministry of Finance said that it expected 3.2 percent growth this year — reversing the pandemic-driven downturn of 2020. The International Monetary Fund forecast just 2.1 percent growth two months ago.

The Saudi economy is expected to maintain growth in the second half of the year. The expansion is also backed by higher oil output amid an OPEC+ agreement.

The Kingdom’s finance, insurance, real estate, and business sectors are likely to expand by 9 percent annually and their relative share to overall economic activity will grow by 12.7 percent.

Meanwhile, the services sector is also likely to grow about 10 percent annually on average, implying that its relative gross domestic product (GDP) share will climb to almost 40 percent in 2030.