ONE of the biggest insurance companies in the world fraudulently made flats ‘worthless’ claim homeowners in Swansea’s Meridian Quay.
A group made up of local residents are claiming surveyors for Zurich bypassed the company’s electronic system and issued cover notes written by hand as proof of their insurance policy.
Residents of Meridian Quay also claim that surveyors didn’t actually visit the site to carry out inspections before issuing the documents.
Zurich “strongly disagree” with these claims. They said that checks “were solely for the purpose of deciding whether to insure the flats against future faults”.
Meridian Quay residents said that if they had known that their cover notes were fraudulent, they wouldn’t have purchased apartments in the development, which includes Wales’ tallest building.
Those documents are required by lenders before approving a mortgage.
Solicitors who are representing the residents said they knew that the Swiss-based insurance company had reduced the amount of surveyors employed in 2008 after it decided to exit the building guarantee market.
They are also claiming to possess “strong evidence” that shows “no inspections took place at the development by Zurich surveyors from a very early stage”.
They also say “Zurich over-allocated developments to those surveyors it did employ, and Zurich knew (or at least ought to have known), no reasonable surveyor could properly perform the inspection process in accordance with the surveyor guidance.”
Another claim says that cover notes “were not issued on an individual basis but on a compendious basis taking in multiple departments in the development”.
Senior construction partner at Walker Morris solicitors, Martin Scott, said: “At the time, Zurich was one of a handful of home warranty insurers in the market and one of the leading insurers for high rise, multi-occupancy developments.
“All the protocols and all the systems they had in place, everything they told the consumer about what their product was and what they would do is rendered to nought because they simply didn’t inspect at all.
“With the defects that have been identified, it effectively means occupants are simply imprisoned where they can’t sell, they can’t re-mortgage, they can’t do anything other than deal with the defects at a massive cost. Without pursuing this claim for deceit, they have a future which looks pretty grim.”
90 flat owners are part of the deceit claim against Zurich.
Phil Lake, managing director of Meridian Quay Limited the head leaseholder of the development, said:
“Financially, the management fees have doubled,”.
“The residents have paid £1,000,000 in excess in insurance premiums as a result of the fire defects..”
Mr Lake claims that Zurich have behaved both fraudulently and recklessly.
He said: “We have the evidence to show they didn’t actually send surveyors here to properly inspect the development.
“We hope to be able to claim £25m to cover the fact when people bought these apartments, they were actually worth nothing. We’re also claiming for £5m in punitive damages.
“At the end of the day people have been living here in danger.”
Flat owners at Meridian Quay have also filed a claimed against East West, another insurance firm, over its 10-year new home warranty.
That warranty was taken out to cover any structural problems or fire safety issues that might take place.
Those issues were supposed to have been, according to the warranty, taken care of by the developer in the first two years and then by Zurich for the remaining 8 years.
Zurich Insurance Limited transferred its liabilities to East West in 2018 but, by the October of 2020, East West had entered administration.
Meridian Quay residents claim that “aggressive claims handling practises” that were applied to leaseholder claims suggest Zurich and East West knew that the indemnity limit would not be enough to cover every individual claim.
Its believed that negotiations are continuing with the Financial Services Compensation Scheme to cover 100% of the remediation work needed to correct construction and fire safety issues diagnosed around Meridian Quay.
Carillion, the construction firm behind the development, already did some remediation work on Meridian Quay before it went bust in 2018.
A Zurich spokesperson said that the insurance firm was “sorry to hear of the difficulties leaseholders are experiencing” but that they “strongly disagree with the allegations being brought against us.”
“The local authority was responsible for ensuring the development complied with building regulations,”
“Zurich’s own checks were solely for the purpose of deciding whether to insure the flats against future faults.
“Zurich’s policy clearly stated that the insurance checks did not confirm or imply that the new home was or would be free of defects or damage.
“The purpose of the policy was to provide insurance in case such defects materialised. We are sorry to hear of the difficulties the leaseholders are experiencing.
“While we no longer manage these claims, the insurance policy is responding in full and repairs are being carried out.”
A Swansea Council spokesperson said: “The council is not a party to the High Court proceedings referred to. The council is unable to comment on the issues raised as these are matters for the parties to the proceedings and the court to resolve.”
A High Court judge at the Technology and Construction Court in Cardiff will hear this case later in 2021.
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