Plan Insurance Blog

Insurance Giant Zurich Signs Off Thousands Of Dangerous Flats

Swiss company Zurich, one of the largest insurance companies in the world and a significant player in the British market, is being accused of intentionally signing off dangerous flats as safe. Zurich, valued at £46 billion, issued ten-year warranties for 400,000 homes in Britain between 1993 and 2009.

These allegations of wrongdoings have surfaced in the first compensation claims related to Britain’s building safety scandal, beginning with the Grenfell tragedy. The blaze brought to light that approximately 700,000 people lived in flats that posed serious fire risks but had been deemed suitable to pass inspection. Zurich has gained negative attention because some of the homes they’ve signed off feature highly flammable cladding, similar to the material responsible for the death of 72 people at Grenfell Tower in west London.

Did Zurich Intentionally Have Too Few Surveyors To Encourage Signing Off Of Properties Without Inspection?

Zurich let go of a considerable proportion of its surveying staff after the 2008 financial crisis but still had tens of thousands of properties to inspect and insure. It’s being claimed that it was essentially impossible for them to provide a good service. Those pursuing the case state that the consequence has been thousands of homeowners and leaseholders being left in a terrible situation. They are living in unsafe and sometimes uninhabitable properties, not to mention out of pocket by thousands of pounds due to the repair bills.

Some ex-Zurich surveyors have stated that they were considerably overworked and that direction from their superiors was unclear. At the time many of the inspections took place, there were supposedly only two senior surveyors responsible for the entirety of Wales and western England.

Documents from the claim against Zurich state that they were intentionally understaffed in the surveyor division, making it more likely that uninhabitable homes would be quietly shuffled through the inspection process and deemed suitable. Meridian Quay, a building on the beachfront in Swansea, had its first cover note issued in 2008. The company managing the development checked the site visitor log and found that Zurich had not visited the site since 2007.

Zurich Isn’t Ready To Hold Their Hands Up

The insurer has already paid out on three fraud compensation claims, one of which included leaseholders on a Manchester housing block that was evacuated due to fire risks. At New Lawrence House, Zurich surveyors issued cover notes for flats with balcony doors that led straight out into thin air. Zurich had also issued building regulation certificates of completion for blocks of flats that hadn’t been built.

Solicitors acting for the leaseholders of New Lawrence House assumed that Zurich would hurry to pay for the obvious defects. They were wrong.

It took three years to win a Court of Appeal ruling. It was ruled that leaseholders were entitled to £10.9 million for the total purchase price of all the flats. In the final outcome, the judge ruled that it was “impossible to see any circumstances in which [Zurich] would ever pay out under the terms of the policy”.

Zurich Accused Of Putting Profit Above The Lives Of Homeowners

At Snowdon Mount, a block of flats in Bournemouth, every claim under Zurich warranties has been rejected since 2014. This has left leaseholders to pay repair bills of an incredible £60,000 each. The block has now been evacuated, with residents paying mortgages on empty flats and renting elsewhere.

Its alleged that Zurich’s claim handlers presented all manner of justifications for rejecting residents’ claims. These include rebuttals on the grounds that people weren’t affected to the extent they claimed, and that uneven floors were stable. At Snowdon Mount, residents spent years living with plastic sheets with buckets and funnels strung up to catch the rain.

Nightmares For Residents Excited For A New Home

Reports accuse Zurich of negligence that left a pregnant mother sleeping under a gaping hole in her ceiling, a leaseholder having their home repossessed due to repair costs and a man facing bankruptcy as the result of having a shattering £100,000 in repair bills on a £110,000 flat.

The latter resident, Deepak aged 40, from Portsmouth, said, “I didn’t commit a crime. I just bought a flat, and it now endangers the future of my six-year-old child”. He had to spend money on replacing unsafe cladding and unsafe balconies on his small flat. Zurich surveyors had “fraudulently” signed off all this work.

These historical operational failings by Zurich appear to be willful incompetence. The company made plenty of money from their fraudulent activities and ruined the lives of ordinary people. Zurich’s actions as a company affected thousands of people’s mental, physical and financial wellbeing. They need to be held accountable.

Clients of Plan can rest assured that their property policies are not currently on cover with Zurich nor were they at the period in question. We can provide competitive quotes for property owners and landlords insurance, including blocks of flats insurance. Our expert brokers will ensure you have the comprehensive coverage you need for your business.

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