Royal & Sunalliance faces a multi-million-pound claim after fire tore through City University last week.

The fire started on the fifth floor of the old part of the university in Clerkenwell, and the building was engulfed by 40ft flames. Students doing their exams had to be evacuated.

A spokesman for the university said: “We don't yet know how the fire was started but we estimate that the cost of the damage is going to run into millions.”

Royal & Sunalliance insures the building. A spokeswoman said: “The fire is being investigated at present and we have a forensic team trying to establish how it started.” Three scaffolders were hurt when an unstable wall collapsed at the university the day after the fire.

Part of the fourth floor fell down, bringing scaffolding and part of the building crashing down on the men working below. The most seriously injured man had leg, head and possible spinal injuries.