Construction Cost Consultants Highlights Critical Lessons from Grenfell Tower Inquiry for New Zealand’s Insurance Industry

Auckland, 7 October 2024 – Construction Cost Consultants, a leader in insurance valuation services and quantity surveying across New Zealand, is urging the insurance industry to take note of key findings from the Grenfell Tower Inquiry (released Phase 1 in October 2019 and Phase 2 in September 2024), which holds important lessons for fire safety, construction practices, and insurance coverage.

The Grenfell Tower fire, which occurred in London in June 2017, claimed 72 lives and exposed significant flaws in construction practices, building regulations, and the response of key organisations. The inquiry’s comprehensive reports have now provided a detailed investigation into the causes of the fire and its rapid spread, with recommendations that have broad implications for the insurance and construction sectors globally, including New Zealand.

Andy Thomson , Managing Director of Construction Cost Consultants, said: "The findings of the Grenfell Inquiry highlight critical gaps in both construction standards and regulatory oversight. For the New Zealand insurance industry, these findings offer vital insights into how similar risks can be mitigated to prevent disasters in high-rise buildings and other properties with complex fire safety requirements."

Key Lessons for the Insurance Industry:

1. Building Material Risks: The Grenfell fire was exacerbated by the use of unsafe cladding materials, specifically Aluminium Composite Material (ACM), which failed to meet fire safety standards. New Zealand insurers need to be aware of the risks associated with such materials and ensure that policies reflect the highest safety standards.
2. Accountability in Construction and Compliance: The inquiry exposed how the mismanagement of building refurbishment and the manipulation of safety tests by manufacturers contributed to the fire. Insurers should evaluate how building projects in New Zealand are monitored for compliance with current fire safety regulations and material testing standards.
3. Comprehensive Evacuation Plans: The failure to evacuate Grenfell Tower early in the fire’s progression was a significant factor in the high casualty count. In New Zealand, insurers should assess whether buildings have adequate evacuation strategies in place, especially for high-rise structures, and whether clients are meeting their obligations under fire safety regulations.

Future-Proofing Insurance Coverage:

With these findings in mind, Construction Cost Consultants advises New Zealand insurers to take proactive steps in reviewing their policies to ensure they cover and account for fire risks in both existing and new developments. Special attention should be given to the type of materials used in high-rise buildings, compliance with fire safety regulations, and the adequacy of evacuation strategies.

"At Construction Cost Consultants, we are committed to supporting the insurance industry with expert quantity surveying, cost assessments, and rebuild valuations to ensure that risks are appropriately managed and mitigated before tragedies occur," added Thomson.

Addressing Existing Buildings with ACM Cladding:

For existing buildings in New Zealand that still have ACM cladding, Construction Cost Consultants recommends the following approach to manage and mitigate fire risks:

1. Conduct a Thorough Building Audit: Building owners, insurers, and regulatory bodies should collaborate to identify all buildings with ACM cladding. Risk assessments should be carried out to determine the level of fire hazard posed by the type of ACM used.
2. Evaluate Fire Safety Systems: Comprehensive evaluations of fire safety systems, including sprinklers, fire doors, and evacuation routes, should be conducted to ensure they meet safety requirements in buildings with ACM.
3. Consult Experts: Engage qualified fire engineers and building surveyors to assess the risks and determine appropriate remediation strategies. Quantity surveyors like Construction Cost Consultants can provide cost assessments for any necessary remedial works.
4. Develop a Remediation Plan: Not all buildings with ACM cladding will necessarily require full replacement. Based on risk assessments, some buildings may have adequate fire safety systems in place that reduce the need for immediate or complete replacement. However, high-risk ACM should be replaced with non-combustible alternatives where necessary. Until this can be done, temporary safety measures such as fire barriers or enhanced fire detection systems should be considered.
5. Insurance Adjustments: Insurers may need to adjust policies to reflect the increased risks associated with ACM cladding. Collaboration between insurers and building owners will be essential to ensure the timely replacement of unsafe materials where necessary.
6. Regulation Updates: Strict guidelines should be adopted to ensure that no further buildings in New Zealand are constructed using dangerous materials such as ACM, and the industry should be educated on safer construction practices.

The Grenfell Tower Inquiry serves as a stark reminder of the need for stronger regulatory frameworks and better accountability across all sectors. Construction Cost Consultants stands ready to assist insurers in adapting to these essential lessons for the New Zealand market.