The government has agreed a pledge with five
sector-leading insurance brokers, which could mean thousands of
leaseholders in buildings with identified fire safety issues see
a significant reduction in their insurance premiums.
Each broker is committing to stop the practice of sharing
commissions with those parties who place or arrange buildings
insurance, such as property managing agents, landlords, and
freeholders.
They are also promising to have a cap of 15% on the proportion of
the premium that brokers take to compensate for their work in
arranging the insurance. The Financial Conduct Authority
(FCA) report on broker
remuneration found that this amount can be as high as 60% of the
cost of the premium paid by leaseholders.
The FCA’s findings have strengthened the Government’s resolve to
see a ban on the practice of sharing commissions, as announced by
the Secretary of State for Levelling Up, Housing and Communities,
, in January 2023.
This pledge is an
important step towards implementing that policy.
Minister for Building Safety, , said:
“I strongly welcome the decision of these brokers to step up and
demonstrate their willingness to do more on bringing premiums
down.
“These brokers are to be congratulated on their decision; we now
need to see further action from others in the broader insurance
and broker industry to accompany it.”
The brokers that have individually taken the voluntary decision
to sign up to the pledge are: Lockton LLP, Bridge Insurance
Brokers , Brown & Brown Insurance Brokers (UK) Limited, PIB
Group Insurance Brokers/ St Giles, and Willis Limited (WTW).
The pledge will benefit leaseholders who are living in buildings
over four storeys or 11m in height with identified fire safety
defects, which have been made known their insurance brokers.
The brokers who have signed up to the pledge have also confirmed
their commitment under new FCA rules, from 31 December 2023, to
share information about the buildings insurance policy with
leaseholders if requested.
These companies will act with immediate effect for new policies
and the Government will monitor the adherence to and impact of
the pledge.
Department officials stand ready to discuss the pledge with any
relevant broker and expect to see the numbers of responsible
brokers increase over coming weeks.
