Grenfell-affected residents face 'extortionate' insurance

Chandri Bhan wanted to relocate but said she couldn't

Residents in an east London block of flats say that their insurance has become "extortionate" after the Grenfell tragedy.

Homeowners at Tower 8, Barrier Point, Newham, live in a block of 54 flats affected by potentially flammable cladding.

Their last insurance premium was almost five times higher than the previous year, and follows numerous increases.

"It's completely paralysed us," said single mother Chandri Bhan.

Tower 8 at Barrier Point has potentially flammable cladding

David Ovenden, chief underwriting officer at AXA Commercial, which is the primary insurer for the flats, said that "buildings with extensive flammable cladding have the highest hazard and loss potential".

The surge in rent at the development in the Royal Docks has resulted in some leaseholders taking out bank loans to cover the costs.

The last insurance premium amounted to £319,803, translating to an average of £5,922 per flat.

The year before it was £1,169 per flat.

• Gove calls for flat insurance probe as costs soar

• More flat owners to be freed from cladding bills

Ms Bhan, who works in financial services and has a seven-year-old daughter, said: "It's beyond horrendous.

"From a financial perspective, it's a huge burden more per year, on top of my service charge. That's not a small amount. I needed to renew and refinance my mortgage.

"I had to consider relocating, I wasn't able to do that. I am held in this hostage in this building."

Wayne Newall has taken out a loan to cover the insurance costs

IT engineer and father of two, Wayne Newall, said: "This year, I'll have to take a bank loan out to cover the insurance costs.

"They're absolutely crippling and having a devastating effect on me and my whole family. And we've been told that there are no signs that it's going to get less over the coming years."

Siobhan Pearce, an environmental conservationist with a six-month-old child, said: "It's an extortionate amount, it's so shocking. Nothing in our risk of the building has changed.

"We've got a lot of increased expenses with the baby right now. Me and my husband have had to dip into our savings."

The predicament is not unique to Tower 8 at Barrier Point. Other cladded buildings across the country are facing similar challenges, and hundreds of London buildings are thought to be affected by rapidly soaring building insurance costs post-Grenfell.

The 2017 Grenfell Tower fire, which killed 72 people often led to sharp increases in service charges, costs for 24 hour "waking watch" fire patrols and spiralling building insurance costs, particularly those with high fire risk and potentially flammable cladding.

Tenants of flats must usually contribute towards a group buildings insurance policy, but they have little or no control over the type of policy chosen.

The Financial Conduct Authority said that it will step in to address the issue of excessive insurance rates for those in flats with Grenfell-style cladding, after warnings that intervention was needed to prevent the abuse of brokers' commissions.

Housing Secretary Michael Gove said he was "outraged" by soaring costs and asked the British Insurance Brokers' Association to look into the practices.

'No urgency'

Stephen Timms MP for Eastham, where Barrier Point is located said: "I'm worried by insurers providing quotes that are prohibitively more expensive than those given previously. In some cases, insurers are withdrawing from the market and refusing to quote at all.

"The Secretary of State told me earlier this year that he was aware of the problem and that insurers were 'squarely in our gun sights'. I understand he has met with the Association of British Insurers but I see no sign of urgency in helping leaseholders whose premiums are rocketing."

The primary insurance for Barrier point is provided by AXA up to £10m, with Gallagher coordinating cover for higher amounts.

A spokeswoman for Gallagher said: "Insurers are responsible for setting the price of insurance premiums; as a broker our role is to help our clients secure insurance cover and we work with many different insurers to obtain the best solution and price."

David Ovenden, chief underwriting officer at AXA Commercial said: "We sympathise with the situation these leaseholders face and have stepped in to provide coverage when none was available.

"The pricing is driven directly by the construction — buildings with extensive flammable cladding have the highest hazard and loss potential.

"We are keeping premiums as low as possible despite the enhanced risk, and where buildings have been remediated to a resilient standard, we have honoured our commitment to bring premiums down."

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