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Building fires send insurance cost through the roof

Building fires send insurance cost through the roof

May, 2017
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Increased insurance cost due to fires in towers means high prices for flat owners.

Dubai: Billions of dirhams in losses from a spate of spectacular skyscraper fires in Dubai and Sharjah have prompted insurance companies to increase premiums on building owner associations and managing developers four fold, heard delegates at the Smart Skyscrapers Summit in Dubai on Thursday.

Summit speaker Michael Kortbawi, Dubai-based corporate lawyer and insurance specialist, said high-profile blazes at Tamweel Tower, the Torch tower and Address hotel in Downtown Dubai and others have raised the risk profiles of tall buildings with insurance companies wanting more money to cover potential damage.

“There has been a substantial increase in the number of fires in the last seven years,” said Kortbawi.

The costs could be borne by increased common-area maintenance fees for flat owners to make up for the surge in insurance cover for entire buildings.Kortbawi said tower insurance is not to be confused with individual content insurance for flat owners and tenants who must take out their own policies to cover their personal belongings. Kortbawi said building owners of new towers must be more cognisant of the materials they are choosing through architects and contractors to reduce the chance of fire damage.

Flammable cladding used on towers, for example, has been linked to tower fires racing across the exteriors of at least a dozen skyscrapers in recent years. An estimated 1,000 buildings in the UAE are covered in aluminium cladding which is now being replaced by more fire-resistant composite cladding.

In his remarks to delegates, Kortbawi said the New Year Eve blaze that engulfed the Address hotel in Downtown Dubai was estimated by the insurance industry to have caused $800 million in fire damage as well as another $400 million in lost revenues. The fire was attributed to an electrical short circuit on a spotlight on the 63rd storey and then shifted to aluminium cladding, sweeping across the facade of the building.

“Insurance building coverage is no longer low. If you want to insure your new building, you are going to have to pay substantially more,” he said.

Peter Stephenson, associate director, Fire Engineering, BuroHappold Consulting Engineers, told summit delegates that “it’s important to understand good fire safety management”. He said that when “looking at litigation and insurance within design costing, there is a professional responsibility” to be embraced.

Stephenson said of the 100 tallest buildings in the world, the majority are not exclusively residential.

Of the total, 41 per cent are mixed use and 38 per cent are entirely office space.

Published:  May 2017 

Publisher: gulfnews.com

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