12 months ago, received wisdom in the real estate insurance market was that premium rating increases would prove to be almost inevitable during the course of 2009, with insurers generally making it known that they would be looking for set increases across their books of business, ranging from 5% to 9%.
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My work on the London Views Management Framework, on behalf of the City Property Association and featured in an earlier blog, led to one of my regular columns in Property Week. As a result of that, the Investment Property Forum commissioned me to write an article on some of the wider aspects of the insurance implications of a changed planning policy for its journal. That has just been published in the latest edition of "Focus" and the IPF has kindly given permission for my article to be featured on the JLT Real Estate blog - It addresses some serious concerns about the ability of a normal insurance programme to respond to the investment threatening restrictions that might be imposed by the relevant authority if a building is destroyed and cannot be reinstated. This is an area that seems to have been overlooked before but for which the real estate team at JLT have now developed a range of solutions.
As you may know, I joined the real estate team here in July - the pinnacle of my career spanning some 45 years focussing on commercial property insurance. During that time, as well as being Chairman of the Insurance Committee of the British Property Federation, I have been honoured to be elected as President of the City Property Association - a post that I have held since March 2008.
It was in this role that I became engaged with the consultation concerning the Mayor's proposals to amend the LVMF put in place by his predecessor some two years ago. This complex guidance to planning authorities sets out the restrictions that will apply to any new development to prevent it encroaching on the views of certain strategic buildings - primarily the Tower of London, The Palace of Westminster and St. Paul's Cathedral.
I wanted to bring your attention to an article published in the latest edition of Property Week by Bill Gloyn, Partner, Jardine Lloyd Thompson Real Estate and President of the City Property Association.
I read with some interest his thoughts on the revised ideas for the London Views Management Framework coming out from the London Mayor's office. This forms part of the consultation on the new draft London Plan. The framework basically governs what can be built in and around certain heritage buildings of international importance - in particular, St. Paul's Cathedral, the Houses of Parliament and the Tower of London.
Following on from the recent Judgment handed down in the Employers Liability "Trigger" Litigation we attach our Technical & Legal Bulletin .
The bulletin explains the ruling by Mr Justice Burtons ruling, maintaining the status quo that insurers are on risk at the time of exposure to asbestos fibres and are
liable to provide an indemnity to their insured even though mesothelioma does not develop until a number of years later.
Property companies must show a focus on risk management to avoid increased insurance premiums
Some real estate investors have good insurance claims records because they manage their risks; others have just been lucky. But when insurance policies come up for renewal in the current climate, underwriters are going to ask - was it good luck or strategy? Without evidence to the contrary, they're going to assume it was luck.
The protection of assets against loss, damage and destruction and the continuity of rental income have always been of significant importance to property investors.
Traditionally there has been a reliance on managing agents and property managers coupled with insurers' relatively infrequent surveys to manage risk, and recommend improvements.
In a recent article published in the Financial Times (25th February 2009), I gave a warning to property owners.
With the prospect of higher premiums, it will be important for landlords to demonstrate that they are managing risks appropriately...
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Should you wish to take formal advice please contact the author or your usual JLT contact.
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