Source · Select Committees · Public Accounts Committee
Recommendation 30
30
Accepted
Risk-pooling arrangements have not effectively reduced extreme building insurance premiums for leaseholders
Conclusion
MHCLG told us that it was bringing forward statutory changes to ban insurance brokers from paying commissions to freeholders and managing agents, and capping what freeholders can charge leaseholders for arranging insurance.51 MHCLG told us that the risk–pooling arrangements it had brokered with the insurance industry to reduce rates had not yet had the impact it hoped on reducing the most extreme premiums. It recognised that “while dents have been made”, the problem of high insurance premiums was not yet resolved and there was more it could do. In its Plan, MHCLG said it was considering whether, for the duration of its remediation programmes, government might support the industry to reduce “unaffordably high” insurance bills.52
Government Response Summary
The government agrees on the importance of building evidence on the cost of buildings insurance and commits to continuing to gather data with industry and stakeholders. This data will inform the consideration of government support to reduce fire-related liabilities, and an update on progress will be shared by the end of 2025.
Government Response
Accepted
HM Government
Accepted
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.