Build-Zone secures backing from second ‘A’ rated insurer

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Leading 10 & 12-year Structural Warranty provider Build-Zone, has secured capacity from a second ‘A’ rated insurer, following the recent announcement of their deal with XL Catlin, part of the AXA XL Group

The long term, exclusive partnership with global speciality insurer, Fidelis Underwriting Limited (“Fidelis” or “FUL”) enhances Build-Zone’s ability to insure Residential, Commercial, Mixed-Use, Build-to-Rent and Social & Affordable Housing developments in the UK, up to £250m per single structure.

The deal also enables Build-Zone, a trading style of Sennocke International Insurance Services, to underwrite risks located in Ireland via Fidelis’ Dublin based entity Fidelis Insurance Ireland DAC.

Fidelis’ growing market presence was recently recognised as they won the ‘Insurer of the Year’ award at the prestigious Reactions London Market Awards.

Moving past turbulent times

Head of broking & business development at Build-Zone, Joe Gooden, said: “The past two years have been a very turbulent time in the inherent Defects market.

“The bankruptcy of Danish un-rated insurer Alpha in May 2018 left thousands of CRL policyholders without cover and with no option but to purchase new Warranties, which of course came at an additional cost.

“Two of the major insurers in the sector, AmTrust International and Canopius (Lloyd’s Syndicate 4444) then took the decision to exit the market in 2019, leaving many Warranty providers without insurer backing.

“This was compounded earlier this year when Building Life Plans (BLP) announced that their insurer, Allianz Global Corporate & Specialty, would be terminating their long-standing partnership from the end of November 2020, leaving question marks around its future.”

A robust solution for developers and contractors

Gooden added: “Having started the relationship two years ago, we have worked tirelessly with Fidelis to put in place a robust solution for Developers and Contractors, giving them the peace of mind that they are working with a financially strong outfit that is in this for the long term.

“Since the facility launched in mid-April, we have already looked at over £4bn worth of projects across the length and breadth of the country with the largest scheme placed to date being £97m.

“We are seeing a common trend in the market at the moment where many of those providers that are left are restricting their capacity to £25m per structure, which is leaving clients vastly under-insured. What sort of protection is a £25m limit giving to a scheme that is greater than that in Contract Value?

“Unless you read the small print, it is not always easy to identify this issue and on numerous occasions we have seen clients purchase policies that simply are not fit for purpose.

“Everything we do at Build-Zone is on a Full Value basis, meaning that if your scheme has a Build Cost of £100m, you will receive £100m worth of cover & protection for you, your Funders and your Buyers or Tenants.”

Gooden concluded: “In addition to being able to offer large amounts of capacity, we’re also the only Warranty provider that can offer flexibility around the Defects Period the policy carries – the standard 24 months, like the NHBC (National House-Builders Council) reducing to 12 months to match most Contractor Maintenance Periods, or removing the Defects Period entirely, meaning cover commences at Practical Completion.

“At the moment, with the effects of the global Covid-19 pandemic hitting the Construction industry and most others hard, Developers are concerned that they may not be able to sell units as quickly as they could pre Covid.

“At Build-Zone, all of our products are available on either a 10 or 12 year policy period and we are seeing more clients choosing to pay the extra premium for an additional two years coverage so that if units take longer to sell, the buyer will still benefit from a policy that has over 10 years to run.

“If you are a Developer, Contractor, Construction Professional or Broker and would like to discuss in more detail about how Build-Zone can assist you, please do get in contact with me on joe.gooden@build-zone.com.”

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