Global reinsurer Munich Re has won a dispute against Norwegian insurer Protector Forsikring which relates to reinsurance contracts that cover the financial property loss following the Grenfell Tower fire in 2017.
In an Oslo Stock Exchange Filing, Protector states that its second-quarter 2019 results will include a £6.9 million loss following the result of arbitration involving reinsurer Munich Re.
In the aftermath of the Grenfell Tower fire in London’s Royal Borough of Kensington and Chelsea, Protector revealed that Munich Re was the lead reinsurer, adding that it would pick up most of the loss.
The two companies subsequently disputed the interaction between the protection acquired to cover properties in the area.
“The panel decided against Protector’s understanding of how the reinsurance contract covers the financial property loss following the tragic fire in Grenfell Tower.
“Protector has not booked any reserves for this outcome in previous quarters. The company’s Q2 results will include a loss of MGBP 6,9,” states Protector in an Oslo Stock Exchange Filing.
The Norwegian insurer also explains that it is of the opinion that the company had relied on advice from its broker, and as such, will discuss the loss with them in the near future.
“The conclusion from the Arbitration panel is surprising to Protector, but cannot be appealed. The result will not have any further consequence on Protector’s reinsurance accounts. There are no reinsurance exposures with the same structure as RBKC and Grenfell Tower, and future losses are covered on a different basis where the issues in dispute are not relevant.
“It is unfortunate that this dispute has generated additional negative attention to the terrible human tragedy of Grenfell Tower. Protector has a firm commitment to handle the remaining process of the Grenfell Tower claim with integrity and quality. The company also remains committed to the long term plans for the UK operations,” continues the firm.
Initially, Protector estimated that the tragic fire would drive an insurance industry loss of £50 million, of which it expected to assume net claims of £2.5 million.
“Our client, Royal borough of Kensington and Chelsea was not party to the reinsurance dispute and the outcome will not affect the handling of the losses with the borough,” concludes Protector.
