Protector Forsikring ASA of Norway, the insurer of the Grenfell Tower block in London’s Royal Borough of Kensington and Chelsea, has estimated that the tragic fire that occurred at the apartment block will cost an estimated £50 million (US$64.4mn), with the majority being assumed by the reinsurance industry.
According to Protector’s Q2 2017 preliminary report and accompanying presentation, while the financial impact of the tragic Grenfell Tower fire will take some time to be fully-realised, it’s given a preliminary loss estimate of £50 million for gross claims, all products, which includes property and liability claims, and other potential costs.
Of the preliminary £50 million estimate, Protector expects net claims of £2.5 million (US$3.2mn), which suggests reinsurers will foot the bulk of the costs, or the remaining £47.5 million (US$61.2mn).
Reinsurance News discussed previously that German-based reinsurance company, Munich Re, is the lead reinsurer for the Grenfell Tower, with Protector’s Chief Executive Officer (CEO), Sverre Bjerkeli, telling Reuters that Munich Re “will pick up almost the entire cost.”
Protector explains that the Royal Borough of Kensington and Chelsea was assessed as a “good risk on property,” with results from inspections of properties being “very good,” so it appears the insurer felt that against its standards, the apartment block was insurable.
Some media reports suggest that the Grenfell Tower fire could result in the largest ever insurance claim for a building fire, which would mean a large hit to exposed reinsurers. What portion of the total insurance cost would be shared within the reinsurance market remains unclear, as it seems a large share of the industry exposure could lie outside of Protector’s policy for the building itself.