RAAC’ing up the cost: Insurance sector responds as RAAC crisis continues

Following the recent safety concerns and increased news coverage on buildings containing Reinforced Autoclaved Aerated Concrete (RAAC), the Local Government Association is advising its members to check as a matter of urgency whether any buildings in their estates have roofs, floors, cladding or walls made of RAAC.

What is RAAC?

RAAC, also known as “Aero Bar” or “Bubbly” concrete, is a lightweight form of concrete commonly used in roof, floor, cladding and wall construction in the UK from the mid-1950s to the mid-1990s. According to an article published by The Guardian, issues with RAAC had been identified as early as the 1980s when buildings constructed in the 1950s began to fail and required demolition.

The Extension of Risk

Despite reports that the majority of properties which contain this material are thought to be public buildings, many previously public buildings have been sold to private sector property owners, with the problem extending potentially to any property built between 1950 and 1990.

Reports and information papers issued during the 1990s by the UK's Building Research Establishment (BRE) and The Standing Committee on Structural Safety (SCOSS) warned of “excessive deflections and cracking”. There was no evidence at this time to suggest the material posed a serious safety hazard, but the report stressed that RAAC could not be expected to have a “useful life of much more than 30 years.” The 1996 BRE paper resulted in a proposal being made to remove the reference to RAAC from the British Standard for its usage as structural concrete, grading the material as ‘poor’.

In August 2023, the Health and Safety Executive announced that RAAC is now life-expired and liable to collapse with little or no notice. The same month, the Department for Education issued guidance for identifying RAAC, explicitly stating its relevance for a wide range of stakeholders, including:

• Local authorities
• Academy trusts
• Governing bodies
• Schools and colleges
• Building professionals

Insurance Implications  

In their recent bulletin, entitled 'Reinforced Autoclaved Aerated Concrete (RAAC) - concerns are growing over this widely used material', the Loss Adjuster McLarens has stated that:

'The presence of RAAC poses unique challenges in the context of insurance coverage. Building insurance policies may cover damage caused by sudden and unforeseen events. However, most policies are not designed to cover wear and tear or construction defects. If RAAC failure leads to sudden damage to other parts of the building, the policy may respond to the resultant damage only. Still, policy wording and exclusions will need to be carefully reviewed.'

It is believed that the usage of RAAC in construction ceased after 1990, rendering latent defects policies that typically last for 10-12 years after completion, no longer applicable as they have already expired.

Where a building does contain RAAC, this is a material fact which must be disclosed to insurers as part of the fair presentation of risk. It is not yet clear what steps insurers may take where RAAC is disclosed as being present, but it’s likely that insurers will insist that the structural safety of the property is regularly monitored.

New Considerations

Brokers and insurers should stay updated on the status of temporary buildings usage may not be covered by existing policies.

Guidance for schools using alternative buildings urges responsible persons to contact their broker and provide details of any temporary buildings or facilities used by pupils and staff. 

Phil Webster, executive director for education and the public sector at Arthur J Gallagher International, told Insurance Times “It is really important that schools discuss any construction work with insurers to understand any implications…”

Webster added that schools should ensure they have sufficient cover in place during building work via a contract works insurance policy, but also warned: “[The cover] is usually limited and may not be sufficient for major repairs – schools should contact their insurance broker, who can advise if they need additional insurance.”

At the time of writing, the full extent and impact of the RAAC crisis is not yet known. Many buildings throughout the country require repairs to ensure the safety of RAAC elements. The high demand for repair and building labour may lead to a shortage of supply, further complicating the issue for property insurers.

This article was written by Laura Roberts, Digital Marketing Associate for Searchlight Solutions.