Kit PetersSwansea residents accuse insurance giant Zurich of fraud over ‘worthless’ flats
Residents of the Aurora complex in Swansea Marina claim Zurich issued 10-year home warranties for their properties, built by Persimmon Homes around 2008, despite surveyors allegedly failing to carry out proper inspections. The allegations are supported by a former Zurich employee who claims surveyors were so overburdened they could not inspect all properties, and that completion certificates were sometimes issued before inspections took place.
Zurich has emphasized that its insurance policy was designed as backup cover that would only apply if Persimmon Homes became insolvent and unable to carry out repairs. The insurer states it was never intended to provide leaseholders with primary cover for building defects, and that responsibility for fixing the issues lies with the developer.
Jayne MacGregor, one of the 30 leaseholders in the legal action, said her retirement investment flat has become a “noose around my neck.” She told the BBC she has had to continue working beyond her retirement to pay legal costs and a second mortgage on the property, which is now blighted by extensive water ingress and fire safety defects.
The legal action follows a 2019 High Court ruling in Manchester where a judge found Zurich had committed “deceit” in a similar case. In that instance, involving the New Lawrence House development, His Honour Judge Stephen Davies ruled that Zurich Building Control had fraudulently issued building regulations certificates for what he described as a “seriously defective” building.
A Pattern of Allegations
The Aurora residents’ claims echo those made in other parts of the UK, painting a picture of what they allege are systemic issues. In the Manchester case, the Court of Appeal upheld the ruling against Zurich, with Lord Justice Coulson describing the insurer’s interpretation of its own policy as a “strained and artificial construction” that made it “impossible to see any circumstances in which [the insurers] would ever pay out.”
Closer to home, residents of Wales’ tallest building, the nearby Meridian Quay tower, reached an out-of-court settlement with Zurich in 2022 over a similar claim alleging deceit. In 2021, around 90 flat owners at Meridian Quay were pursuing a £25 million claim against Zurich, with allegations the firm acted “recklessly and fraudulently.”
Phil Lake, managing director of the head leaseholder at Meridian Quay, said at the time that residents had paid over £1 million in excess insurance premiums due to the defects and that people had been “living in danger.”
The Aurora apartment complex in Swansea Marina in 2011, when residents were purchasing their flats as retirement investments(Image: Google Maps)
Whistleblower Claims
The Aurora residents’ allegations are supported by an anonymous former Zurich employee who told the BBC that when the firm was exiting the home warranty market after the 2008 financial crash, the workload became unmanageable.
“There simply weren’t enough hours in a day [to do all the jobs],” the former surveyor said. “[An] email instruction came down [and said] I’ve issued the cover notes, can you inspect them next week? Well, people are living in them next week so I can’t go and inspect them. It was a ridiculous situation… I knew what we were doing wasn’t right but I still needed to keep shoes on feet and food on the table.”
The developer, Persimmon Homes, is now undertaking a full-scale remediation of the Aurora building to fix the defects, which is expected to be completed by the end of 2026. Persimmon has faced criticism over quality issues at developments across the UK, with reports in 2019 of missing or incorrectly installed fire barriers that led to a fire in an Exeter estate “rapidly escalating” as it spread between properties.
“Property Prison”
For the residents of Aurora, the legal and construction issues have left them in what solicitor Martin Scott describes as a “property prison.” Speaking to the BBC, Mr Scott, who specialises in complex construction disputes, said owners are trapped.
“You can’t re-mortgage because nobody will touch you where there are fire issues, you can’t sell because there’s no market,” he said. “The truth is a property purchase is the biggest purchase any ordinary person will make in their lives so if that goes wrong then their life goes wrong.”
A Zurich spokesperson said: “We appreciate the stress this situation has caused for leaseholders. Responsibility for repairing defects at Aurora lies firmly with the developer, Persimmon Homes. The Zurich policy provides protection if the developer becomes insolvent and cannot carry out repairs. We hope that Persimmon can resolve this situation for leaseholders as quickly as possible.
“The insurer refutes the allegations that insurance documents were issued improperly, and states that while it conducted checks for underwriting purposes, statutory building inspections were the responsibility of the local authority, not Zurich”.
Swansea Council, which was responsible for ensuring the original construction complied with building regulations, said it was unable to comment as it was not a party to the proposed legal action.
EDITORS NOTE
This article was updated on 26 February at 2.50pm to include additional context from Zurich Insurance about the structure of its insurance policy and to clarify the distinction between statutory building inspections and underwriting checks.
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