The Government has agreed a pledge with five leading insurance brokers that could mean thousands of leaseholders in buildings with identified fire safety problems will see a significant reduction in their insurance premiums.
Each broker is committing to end the practice of sharing commissions with those who place or arrange buildings insurance, such as managing agents, landlords and freeholders.
They also promise to cap at 15% the proportion of the premium that brokers take as remuneration for their work in arranging the insurance. The Financial Conduct Authority’s (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 commission sharing, as announced by the Secretary of State for Housing, Communities and Local Government, Michael Gove, in January 2023. This commitment is an important step towards delivering that policy.
Building Control Minister Lee Rowley said:
“I very much welcome the decision by these brokers to step up and demonstrate their willingness to do more to reduce premiums.
“These brokers are to be congratulated on their decision; we now need to see further action from others in the wider insurance and brokerage industry to match it.”
The brokers who 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 living in buildings over four storeys or 11 metres in height with identified fire safety defects which have been notified to 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 provide leaseholders with information about their buildings insurance policy on request.
These companies will apply this to new policies with immediate effect, and the government will monitor compliance and the impact of the pledge.
Departmental officials are willing to discuss the pledge with any relevant broker and expect the number of responsible brokers to increase in the coming weeks.
