(Image source: WhenFresh.)

InsurTech WhenFresh, a London-based supplier of data to U.K. insurers, lenders and other Big Data users, has announced a new cladding data set that will enable insurers to better understand property risk across their policy portfolio, along with all the other data available via API, to drive more accurately priced, instant quotes for new insurance applications.

Since the tragic Grenfell fire on 14th June 2017 and the ‘cladding crisis’ that has since developed, the owners, mortgage lenders, insurers, and developers of properties in tall Multi-Dwelling Units (MDUs) throughout the U.K. with some form of cladding have found themselves facing massive, unforeseen financial exposure. The Grenfell fire began an electrical fault in a refrigerator on the fourth floor and then rapidly up the building’s exterior, owing to combustible aluminium composite cladding and external insulation.

“While the news frequently reminds us how the affected homeowners find themselves as ‘mortgage hostages’, unable to sell and struggling to secure viable insurance, the exposure faced by the financial services sector has, until now, been much less well-documented or understood,” says a WhenFresh statement on the new cladding data set. “However, the fact is that lenders, insurers, and institutional property investors have largely been ‘flying blind’ as they have not had the means to accurately assess their potential risk/exposure to this hugely significant issue.”

Key property risk factors, such as flood and subsidence, have routinely been assessed when deciding whether to offer mortgages or how to price insurance premiums, the WhenFresh statement says. However, prior to June 2017, cladding simply wasn’t something that anyone considered. This is why little or no information about cladded buildings had been captured, until now, the statement adds.

WhenFresh characterizes its “unique” cladding dataset as the result of a major project started in 2020 (during the first pandemic lockdown). It initially involved a wide range of remote inspection tools and data sources (e.g. satellite imagery, drone footage, building and planning records, etc.), which was subsequently enhanced on an ongoing basis by physical surveys and other inputs, all meticulously scrutinised by a group of over 600 Royal Institution of Chartered Surveyors (RICS) qualified surveyors, according to the vendor.

Following six months of in-market testing with a group of existing clients, WhenFresh reports that it has launched the dataset to the wider market, providing property-level cladding data for each of the 485,234 properties within MDUs of 18 metres or more in height throughout the UK. The surveyor team use their expertise to assign each property within these MDUs to one of three categories:

GREEN – Building has no cladding. (Specifically: EWS1 form recorded in Cladding Database with classification A1, A2 or B1 or considered to be out of scope as per RICS’s Cladding Guidance Note)

AMBER – Building potentially has cladding, merits EWS1 inspection. (Identified as potentially in scope, as per the RICS’s Cladding Guidance Note, no EWS1 form held currently)

RED – Building has cladding. (EWS1 form recorded in Cladding Database with classification A3 or B2, or other known adverse factors from alternative sources)

With these classifications, WhenFresh says that mortgage lenders, insurers, local authorities, central government, housing associations, asset managers, and other parties are now able to readily access this unique cladding data alongside any other property data attributes they may need from WhenFresh, either in flat file format or via API in real time.

For example, a lender can now match their whole existing mortgage book to this new cladding dataset via WhenFresh, to carry out detailed analysis at individual property level.

“WhenFresh’s wall cladding dataset enabled Together to truly assess our limited exposure to external wall cladding risk across the full book,” comments Max Griffiths, Group Head of Quantitative Risk at mortgage lender Together Money (Cheadle, Cheshire). “Working with the WhenFresh analytics team has enabled us to establish a clear set of actionable data points that support our prudent approach to lending, and their data enrichment has helped us in preparing data for securitisation issuances where additional reporting requirements around ESG has been required.”

“We’re delighted to be able to bring this cladding dataset to market alongside our existing property data assets, not least as it provides key risk insights into these 485,234 properties which are jointly worth in excess of £50 billion,” says Mark Cunningham, co-founder and CEO, WhenFresh. “There are obvious applications for mortgage lenders and insurers of course, but we’re already seeing interest from local authorities, central government, housing associations, asset managers, and other sectors too.

The Means to Fully Understand Impact of Cladding Issues

“This new dataset provides lenders with the means to fully understand how their mortgage books are affected by cladding issues, down to individual property level, so they can identify where risks lie and make better decisions moving forward,” Cunningham continues. “New mortgage applications can also be pre-screened against this cladding dataset, and it has now become a key component of our WRAP service, where a wide range of data variables are applied to packages of mortgages being prepared for securitisation, to give surety to the buy-side.

“It is obviously a big deal for insurers too, as they can now better understand property risk across their existing policy portfolios and can access this cladding dataset, along with all the other data we make available via API, to drive more accurately priced, instant quotes for new insurance applications.”

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