13 March 2024 , 15:05
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A new plan is being launched to help make insurance more available for buildings that have a high fire safety risk.
The Fire Safety Reinsurance Facility will aim to increase competition in the insurance market for properties affected by things like flammable cladding and other fire safety problems, according to the Association of British Insurers (ABI). This has been set up by reinsurance broker McGill and Partners with support from the ABI and the British Insurance Brokers' Association (Biba), which will help to make sure brokers are aware of it.
The facility is designed to help multi occupancy buildings where fire safety issues have been found and need fixing. The goal of the initiative is to increase the number of insurers already providing cover for affected buildings and to encourage competition, so that more firms will offer cover.
It's expected to run for three to five years, while work is done to make buildings safer and more resilient. The first step will be for the participating insurers Allianz, Aviva, Axa, RSA and Zurich to include the high-risk buildings that they currently insure, and which are waiting for remediation works, into the initiative when their annual renewal comes around.
Whether or not a building is included in the facility will be a commercial decision made by individual insurers on a case-by-case basis. The Grenfell tragedy and Dame Judith Hackitt's review uncovered major design flaws in the way some buildings are built, including fire dangers.
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The ABI explained that insurance companies had to take into account the increased risk of a whole building being destroyed and therefore had to limit how much cover they provide. Sometimes, because of these high risks, brokers, house owners and managing agents have had to get insurance from several different companies.
This could mean that many different insurers need to be involved in insuring just one building, which increases the cost and makes it "layered". It is these types of buildings that will most likely gain the most from this new plan, according to the ABI.
Over time, it is thought that this new plan will bring more competition back into the market and encourage other companies to offer more services for buildings that have been affected. The ABI suggests leaseholders should speak to whoever organises their insurance coverage, like a person or a company. They can then chat about this plan with their broker or insurer.
When it's time to renew the insurance policy for a building, the person or company who arranges the insurance coverage should get in touch with their current broker or insurer as usual, says the ABI. Insurance companies will think about which buildings they already insure could work well with this plan when it's time for those buildings' policies to be renewed.
If you need to get insurance for a building, the broker will chat with insurers to see if they can add the building to their list. They'll also look around to find the best insurance for what the building needs. The broker will then tell the person or company who needs to sort out the insurance what they think is best. This new plan is for buildings all over England, Wales, Scotland, and Northern Ireland.