Following a request from the then Secretary of State for Levelling-up, Housing and Communities in January, FCA (working with the CMA) has published its recommendations and potential remedies to give leaseholders better protection from high prices for buildings insurance and to ensure the market operates better for these customers. Premiums have increased significantly (more tham doubling) since the Grenfell tragedy, and there has been a reduction in the supply of insurance.
FCA is concerned that the market is not working effectively to ensure that all customers and the leaseholders who bear the costs can get appropriate cover for multi-occupancy buildings at affordable prices.
FCA’s suggested measures include:
- creating a cross industry pool to limit the risks to individual insurers posed by certain buildings that are affected by known safety risks, aimed at reducing the price of insurance for those buildings;
- increasing the amount and transparency of information to leaseholder on their policy pricing;
- making it easier for leaseholders to challenge high insurance costs; and
- making leaseholders “customers” of buildings insurance.
FCA will update on progress in 6 months.
The new Secretary of State for Levelling-Up welcomed the report, noting its concerning conclusions, and backed FCA’s recommendation that data quality and risk reporting must improve, and also called on ABI and BIBA to develop the suggested industry-led insurance pooling solution. The response also notes FCA’s observation that freeholders and managing agents sometimes get commission, which is a “highly questionable practice” and clearly detrimental to residents.