Building Safety Act 2022: Implications for Insurers, Risk Managers, and Loss Adjusters

The Building Safety Act 2022 has transformed the construction landscape, introducing a new era of accountability and risk. It reshapes the design, construction, management, and insurance of buildings, marking a decisive shift in the UK’s built environment — with far-reaching implications for claims professionals, insurers, and adjusters.

What Has Changed?

The Act introduces a new regulatory regime with sharper edges and a broader scope:

• Expanded statutory responsibilities: Duty holders (Principal Designer, Principal Contractor, and Client) now carry legal obligations across all construction projects, not just high-rise buildings.
• Stronger regulatory oversight: The Building Safety Regulator (BSR) is responsible for compliance, competence, and enforcement, with authority to impose criminal sanctions.
• The Golden Thread requirement: A digital record of building safety information must be kept throughout a building’s lifecycle, providing transparency and a key line of defence in future claims.
• Closer scrutiny of higher-risk buildings: Mandatory occurrence reporting and gateway approvals for buildings over 18 metres or 7+ storeys add extra oversight, often leading to longer programmes and potential delays.

Insurance Implications

The UK property insurance market has undergone major change. Aimed at preventing tragedies like Grenfell, the Act introduces sweeping reforms that directly affect how insurers assess risk, set premiums, and handle claims. Capacity for combustible or otherwise high-risk residential buildings is now extremely limited, with only a small number of insurers willing to take them on. This reduced capacity not only pushes premiums higher but also limits how much risk any one insurer is willing to cover.

Stricter Risk Assessments

Insurers now require comprehensive documentation before underwriting high-rise buildings, including:

• Valid external wall system (EWS) fire review forms
• Evidence of remediation works
• Detailed Safety Case Reports for buildings over 18 metres

Buildings that do not meet these standards may face:

• Higher premiums
• Restricted coverage (specific perils excluded or loss limits applied)
• Significant deductibles or co-insurance clauses
• Refusal of cover altogether

Extended Liability Periods

The Defective Premises Act has been expanded, extending the limitation period for claims to 30 years retrospectively and 15 years prospectively. This change opens the door to historic claims — even against properties completed as far back as the 1990s.

For insurers, the implications are significant. They should be prepared for:

• Reactivation of long-dormant claims
• Increase in adjudication referrals on legacy defects
• Rise in legal disputes over remediation responsibilities

Adjustment of Claims

Understanding the Building Safety Act 2022 is only the first step; the challenge is applying it in practice. Legislation keeps evolving, and with it the role of loss adjusters. The Act shapes not only risk acceptance but also the way claims are managed, expectations are set, and reserves are planned.

To stay proactive and precise, loss adjusters should:

• Identify high-rise buildings: Refer to the official government register where uncertainty exists.
• Evaluate fire safety holistically: Consider the entire fire safety profile, not just isolated elements.
• Assess regulatory triggers early: Determine whether repairs require an application to the Building Safety Regulator — for example, where fire compartmentalisation has been affected.

Reserve Realistically

A building’s status and any regulatory refusals can directly affect reserves for alternative accommodation, loss of rent, and professional fees. Reserves need to reflect realistic timelines and include suitable contingencies. They also require regular review and open dialogue with insurers if significant adjustments are likely.

Prepare for Regulatory Friction

The Building Safety Regulator often refuses applications because of non-compliant construction methods, incomplete records, missing documentation, or unclear programmes of work. These refusals can slow claims significantly and cause frustration for policyholders, brokers, and insurers. While much of this sits outside the adjuster’s control, taking the right steps early can ease the impact.

Manage Expectations

Managing expectations is central to keeping trust and momentum throughout the process. Loss adjusters do this by:

• Identifying the Accountable Persons at an early stage
• Explaining the regulatory process and the consequences of non-compliance to those who may be unfamiliar
• Highlighting potential delays before they arise
• Providing realistic, but carefully caveated, timelines
• Encouraging early engagement with the Building Safety Regulator
• Drawing close attention to policy limits and indemnity periods

Summary

The Building Safety Act 2022 is now an established part of day-to-day practice. More than a set of rules, it marks a shift in how the industry approaches responsibility and safety. For insurers, risk managers, and loss adjusters, it calls for foresight, proactive engagement, and greater care in handling claims.