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An arbitration panel sided with Munich Reinsurance Co. in a dispute over a reinsurance contract covering the property loss related to the Grenfell Tower fire.
The panel decided against Oslo, Norway-based insurer Protector Forsikring ASA’s understanding of the contract — which means the company’s 2019 second-quarter results will include a £6.9 million ($8.6 million) loss related to the fire — but did not award legal costs, according to a filing with the Oslo Stock Exchange by the insurer on Friday.
The fire, which experts have said could have been avoided, killed 72 people in London in 2017.
“It is unfortunate that this dispute has generated additional negative attention to the terrible human tragedy of Grenfell Tower,” the insurer stated. “Protector has a firm commitment to handle the remaining process of the Grenfell Tower claim with integrity and quality.”
Protector said it was “well prepared” for the “challenging reinsurance situation” with Munich Re in its first quarterly earnings presentation in April, but the insurer called the arbitration panel’s conclusion “surprising” and noted it cannot be appealed in its latest update.
“The result will not have any further consequence on Protector’s reinsurance accounts” because there are no reinsurance exposures with a similar structure to the client’s account — the 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 — and future losses are covered on a different basis, the insurer said.
Protector declined to identify its broker on the reinsurance contract, but stated in its filing: “As Protector is of the opinion that the company has relied on advice from our professional broker, the loss will be discussed with them in the near future.”
The insurer also remains committed to the long-term plans for its U.K. operations, according to its latest filing. The company had previously announced the opening of a London office — in addition to a more than 40-employee team at its Manchester headquarters — and the hiring of Stuart Winter, formerly of JLT Specialty, as U.K. country manager beginning in June.
Munich Re declined to comment.
A survey by the U.K.'s Construction Industry Council found that one in 10 construction firms faced a 50% increase in premium rates for professional indemnity insurance following the June 2017 Grenfell Tower fire, Building.co.uk reported. The council has launched another survey to gauge the fire tragedy's impact on availability of insurance for the construction sector. Fire destroyed the 24-story Grenfell Tower in London on June 14, 2017.