The FCA recently set out a range of recommendations and potential remedies designed to give leaseholders greater protection from high prices and ensure that the buildings insurance market operates better for them.
With leaseholders facing substantially increased insurance costs in the wake of the Grenfell tragedy, the FCA undertook a review of the multiple-occupancy residential buildings insurance market, looking at how it could provide better-value cover for leaseholders.
The review found that the supply of insurance for multi-occupancy residential buildings had reduced between 2016 and 2021, with some insurers leaving the market and others showing a reduced appetite for new business, as profitability became harder to achieve.
Industry data from 2016 to 2021 suggests average buildings insurance premiums have more than doubled, rising 125% from £6,800 and £15,300.
The FCA has suggested a package of potential remedies designed to give leaseholders greater protection and better information on their insurance costs, and improve the affordability and availability of insurance.
The package and potential remedies proposed include:
• Creating a cross-industry pool to limit the risk to individual insurers posed by certain buildings affected by flammable cladding or other material fire safety risks, with the aim of reducing the cost of insuring these buildings
• Increasing the quantity and transparency of information available to leaseholders on how their insurance is priced
• Making it easier for leaseholders to challenge high insurance costs passed on to them, and
• Making leaseholders ‘customers’ of buildings insurance.
The FCA says it will update on what progress it has made on identifying and introducing appropriate remedies in six months’ time.