ARCHITECTS SCRAMBLE TO AUDIT THEIR PROJECTS AS INSURERS QUERY CLADDING

Australian Financial Review

 

Architects scramble to audit their projects as insurers query cladding

 

Architecture firms are scrambling to audit their own past projects, prompted by insurer concerns about problematic cladding similar to that involved in London's Grenfell Tower fire.

Design practices are combing through project records as far back as 15 years to find out whether any of the external cladding products they specified on buildings could fail to meet building code fire safety requirements and create a professional indemnity liability. 



Cladding fallout: In the wake of the Grenfell Tower tragedy, architecture firms are scrambling to audit their own projects to identify possible problematic cladding use. Photo: AP

The situation facing architects, who design a building at the start of the construction chain, is similar to that of building surveyors who certify that a structure complies with regulatory requirements upon completion. Last month, the industry body for Australia's privatised building certifiers warned members that some professional indemnity insurers were imposing exclusions in policies in relation to non-compliant cladding. 



Insurer concern was prompting architects to check their own projects, said Cox Architecture director Alastair Richardson. 

"All architecture practices will be going through audit processes everywhere in the world," Mr Richardson told The Australian Financial Review

"We're looking at it, we're reviewing all the elements of what's been specified, whether something specified is the same as what's been installed."

Concern about cladding – spurred in the wake of London's fatal Grenfell Tower fire that killed at least 80 people – is forcing all players in construction to assess their exposure to the use of aluminium composite panels containing flammable polyethylene – a cheap and good-looking material used widely in the country's biggest-ever housing boom. Where used wrongly, it could pose a safety risk and rectification costs will be expensive. 

Westpac has asked the developers of all new and existing residential and commercial projects it is financing to confirm the compliance of all external wall cladding products.

It was a concern for design firms, said Australian Institute of Architects chief executive Jennifer Cunich. 

"Members aren't ringing us at this stage, which I'm a little bit surprised about," Ms Cunich said. "I believe they have been making calls to insurance companies."

Some firms will talk about it but others will not.

"Woods Bagot is currently reviewing relevant projects and is in discussions with its insurer regarding its insurance program," Australia's largest architecture firm said. 

Hassell, Australia's second-biggest design firm, declined to comment. ElenbergFraser did not respond to a request for comment. Plus Architecture did not reply by deadline. 

It is a global issue, said Chris Wright, an executive director of Howden Insurance Brokers, who heads coverage for his London-based firm of some of the construction industry's largest professional consultancies.

"For those involved in the design, specification, project management or inspection of construction of tall buildings, hospitals and other public buildings – even some tunnels – whilst insurers start to reach a consensus on approach, we like other brokers have been advising our clients to look carefully at or audit their possible exposure," Mr Wright told the Financial Review

Assessments by insurers varied, with non-specialist insurers more likely to refuse to renew policies or bring in exclusions, he said. Strata body underwriter CHU made a similar comment earlier this month. 

"For larger firms, insurers are trying to be more flexible, asking more questions and then looking to renew without an exclusion," Mr Wright said.

"On our larger renewals we have completed renewals without exclusions or premium increases and not seen London insurers looking to quietly drop off placements before having to deal with any fallout. This might change depending on reports and claims activity.  We are already seeing precautionary notifications being made under our policies."

REAL ESTATE

Architects scramble to audit their projects as insurers query cladding

Architecture firms are scrambling to audit their own past projects, prompted by insurer concerns about problematic cladding similar to that involved in London's Grenfell Tower fire.

Design practices are combing through project records as far back as 15 years to find out whether any of the external cladding products they specified on buildings could fail to meet building code fire safety requirements and create a professional indemnity liability. 

Cladding fallout: In the wake of the Grenfell Tower tragedy, architecture firms are scrambling to audit their own ...
Cladding fallout: In the wake of the Grenfell Tower tragedy, architecture firms are scrambling to audit their own projects to identify possible problematic cladding use. Photo: AP

The situation facing architects, who design a building at the start of the construction chain, is similar to that of building surveyors who certify that a structure complies with regulatory requirements upon completion. Last month, the industry body for Australia's privatised building certifiers warned members that some professional indemnity insurers were imposing exclusions in policies in relation to non-compliant cladding. 



Insurer concern was prompting architects to check their own projects, said Cox Architecture director Alastair Richardson. 

"All architecture practices will be going through audit processes everywhere in the world," Mr Richardson told The Australian Financial Review

"We're looking at it, we're reviewing all the elements of what's been specified, whether something specified is the same as what's been installed."

Concern about cladding – spurred in the wake of London's fatal Grenfell Tower fire that killed at least 80 people – is forcing all players in construction to assess their exposure to the use of aluminium composite panels containing flammable polyethylene – a cheap and good-looking material used widely in the country's biggest-ever housing boom. Where used wrongly, it could pose a safety risk and rectification costs will be expensive. 

Westpac has asked the developers of all new and existing residential and commercial projects it is financing to confirm the compliance of all external wall cladding products.

It was a concern for design firms, said Australian Institute of Architects chief executive Jennifer Cunich. 

"Members aren't ringing us at this stage, which I'm a little bit surprised about," Ms Cunich said. "I believe they have been making calls to insurance companies."

Some firms will talk about it but others will not.

"Woods Bagot is currently reviewing relevant projects and is in discussions with its insurer regarding its insurance program," Australia's largest architecture firm said. 

Hassell, Australia's second-biggest design firm, declined to comment. ElenbergFraser did not respond to a request for comment. Plus Architecture did not reply by deadline. 

It is a global issue, said Chris Wright, an executive director of Howden Insurance Brokers, who heads coverage for his London-based firm of some of the construction industry's largest professional consultancies.

"For those involved in the design, specification, project management or inspection of construction of tall buildings, hospitals and other public buildings – even some tunnels – whilst insurers start to reach a consensus on approach, we like other brokers have been advising our clients to look carefully at or audit their possible exposure," Mr Wright told the Financial Review

Assessments by insurers varied, with non-specialist insurers more likely to refuse to renew policies or bring in exclusions, he said. Strata body underwriter CHU made a similar comment earlier this month. 

"For larger firms, insurers are trying to be more flexible, asking more questions and then looking to renew without an exclusion," Mr Wright said.

"On our larger renewals we have completed renewals without exclusions or premium increases and not seen London insurers looking to quietly drop off placements before having to deal with any fallout. This might change depending on reports and claims activity.  We are already seeing precautionary notifications being made under our policies."

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