Source · Select Committees · Public Accounts Committee
Recommendation 32
32
Accepted
Insurance premiums will remain high without full property protection alongside life safety.
Conclusion
In written evidence, the ABI called on government to adopt an approach that priorities property protection and building resilience alongside risk to life. It said that without a standard requiring the removal of combustible material in external walls (insulation and cladding), the risk of significant fire spread would remain after remediation and there would be a limited impact on insurance premiums. MHCLG told us that there was a balance to be struck between paying for remediation that removes all risk or taking a proportionate approach around the right amount of work to do.55 51 Q 50; C&AG’s Report para 2.20 52 Qq 19, 50–51; MHCLG Remediation Acceleration Plan 53 Q 51; RDC0138 Written evidence submitted by the Association of British Insurers, 4 February 2025 54 C&AG’s Report, para 1.11 55 Q 52; RDC0138, Written evidence submitted by the Association of British Insurers, 4 February 2025 21 3 Ensuring value for money Managing uncertain costs and timescales
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.