Source · Select Committees · Public Accounts Committee
Recommendation 29
29
Acknowledged
Exorbitant building insurance costs continue to impose severe financial hardship and debt risk
Recommendation
The Home Builders Federation (HBF) raised concerns that insurance companies were seeking to profit from the building safety crisis. The Shared Owners Network similarly wrote that many shared owners were struggling to pay housing-related costs such as insurance. End Our Cladding Scandal (EOCS) raised exorbitant insurance as one of the many costs that risked putting residents “at risk of life-changing debt or forfeiture”.49 MHCLG’s Plan acknowledged that as well as needing to find thousands of pounds to pay for insurance, high insurance can make it difficult for people to sell their properties. We asked what efforts had been made to discuss the issue with insurance companies. MHCLG recognised that this was “a very serious problem”. It told us that it had asked the Financial Conduct Authority to undertake research into the high-rise buildings market in 2022. This found that the price of insurance premiums in high-rise buildings had doubled between 2016 and 2021. In its plan, MHCLG noted and that some individuals were facing annual bills of over £3,000.50 47 Q 117; MHCLG, Building Safety Remediation: monthly data release - December 2024, 23 January 2025 48 Committee of Public Accounts, Progress in remediating dangerous cladding, Sixteenth Report of Session 2019-21, HC 406, 16 September 2020, recommendation 4 49 RDC0006, Written evidence submitted by the Home Builders Federation; RDC0143, Written evidence submitted by the Shared Owners’ Network; RDC0145, Written evidence submitted by End Our Cladding Scandal 50 Q 50; Financial Conduct Authority, Report on insurance for multi-occupancy buildings, September 2022 para 1.16; MHCLG Remediation Acceleration Plan 20
Government Response Summary
The government agrees on the importance of building evidence on insurance costs and will continue to gather data with industry to inform work on potentially supporting industry to reduce fire-related liabilities. An update will be provided by the end of 2025.
Government Response
Acknowledged
HM Government
Acknowledged
4.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2025 4.2 The government agrees with the Committee that it is important to build evidence on the cost of buildings insurance. MHCLG therefore continues to work with industry and other stakeholders to gather data on insurance costs including premiums for buildings before, during and after remediation. This data will inform MHCLG’s work with industry, announced in December 2024, the Remediation Acceleration Plan (RAP), to consider whether for the duration of remediation programmes, government might support industry to reduce fire related liabilities, in order to reduce the high insurance bills some leaseholders are facing. The evidence being collected will help to ensure any options for support are targeted and effective. 4.3 The government’s view is that remediation reduces risk and that this should be reflected in pricing. PAS 9980 has been developed by the British Standards Institute who drew on expert advice from professionals across industry and public consultation. Recognising that insurers set prices based on risk and their obligation to provide products that are fair value, MHCLG has also asked the insurance industry to build the evidence on the claims performance of remediated buildings and to share that with the government. 4.4 The government will share an update on progress by the end of 2025.