Norwegian insurer Protector Forsikring ASA's dispute with its property reinsurer over claims from the Grenfell Tower fire "will probably go to arbitration," Protector CEO Sverre Bjerkeli said in an earnings call Feb. 2.
Slides accompanying the call said Protector, which provided property and liability cover for the local council-owned tower in west London, had failed to reach "an acceptable compromise" with its property reinsurer over the dispute, which centers on the split of losses from the fire on June 14, 2017, in which 71 people died.
The slides said that the company expects an arbitration letter to be sent "shortly" and estimated that the arbitration process would finish late in the third quarter of 2018.
It added that it had "three different legal opinions" supporting its position.
But Bjerkeli told analysts: "No formal letter has been sent so far."
Protector notified investors of the dispute Nov. 17, 2017, and warned at the time that it could go to arbitration, which would "likely take several months to conclude."
Protector did not name the property reinsurer either in the Feb. 2 slides or the original announcement of the dispute, but has previously said Munich Re will pick up the bulk of the losses from the fire.
It said that if it loses the arbitration, it will add an extra 100 million Norwegian kroner to its bill from the fire.
Protector has set aside £75 million to pay for the Grenfell Tower claims and said it will not increase the reserve level because of the dispute.
The insurer increased the reserve to £75 million from £50 million when it announced its third-quarter results Oct. 26, 2017.
Since the Grenfell Tower fire, investigations have found that the same type of cladding, which was blamed for allowing the fire to spread, has been used on at least 52 tower blocks in London alone, the BBC reported Oct. 24, 2017.
Protector is expanding in the U.K. public sector, but Bjerkeli said on the call that all the tower blocks in its portfolio have been upgraded.
He said: "There are no tower blocks in our portfolio with an [equivalent] cladding to Grenfell Tower now. [The upgrading work] was done extremely quickly."
As of Feb. 1, 2018, US$1 was equivalent to 7.68 Norwegian kroner.
