Source · Select Committees · Public Accounts Committee
Recommendation 31
31
Acknowledged
Insurance premiums may remain high despite remediation due to PAS 9980 life safety focus.
Recommendation
MHCLG told us that, as well as options for intervening in the market to reduce premiums while buildings are awaiting remediation, it expected the insurance industry to hold to its word in reducing premiums as risk is reduced. It said it would monitor if premiums were falling as buildings remediated through the PAS 9980 standard came through the process. However, the Association of British Insurers (ABI) indicated that without significant changes to the government’s remediation approach, premiums may remain high even after remediation.53 The PAS 9980 standard takes a more proportionate approach to remediation that prioritises risk to life and not risk to the building. This approach calls for greater use of lower cost mitigations such as sprinklers and in some cases, where the risk to life is deemed low or ‘tolerable’, it can mean some flammable material staying in place.54
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.