Aviva “disappointed” at other insurers for not offering fairly priced multi-occupancy building insurance

Yesterday the Financial Conduct Authority delivered its recommendations and potential remedies to reform the multi-occupancy buildings insurance market, this included a cross industry pool and lowering commissions.

The authority recommended creating the pool to limit the risk to individual insurers linked with certain buildings affected by flammable cladding or other material fire safety risks. This, the FCA said, was aimed at reducing the price of insurance for these buildings.

Winslow stated that offering the right priced insurance to new customers in cladding-affected buildings is the right thing to do and insisted that Aviva had shown it is commercially viable.

He added: “We are disappointed that other insurers have not yet followed our lead as collectively we could ensure that all leaseholders living in such buildings have access to fairly priced insurance.

“A more formal pooling arrangement may now be necessary to support these leaseholders; we will, of course, continue to support the Association of British Insurer’s work in developing this.”

Appetite

The ABI has committed to working “at pace” on a pool sharing risk solution in its response to the FCA’s report.

Winslow continued: “The FCA found that there has been ‘a significant contraction in the supply of insurance’ and that insurers have ‘limited or no appetite for writing new business’.

“This view does not reflect the action Aviva has taken to provide fairly-priced insurance for existing and new customers living in buildings with combustible cladding.”

In April 2021 Aviva made its insurance available to new customers affected by combustible cladding.

Winslow listed that since opening to new business the insurer has helped more than 6,400 leaseholders secure fairly priced insurance – 1,200 of whom came to it without any insurance in place. The remaining 5,200 customers have seen an average premium saving of 60% since moving their insurance, the provider claimed.

The Aviva boss added that for the last 18-months it had capped broker commission at 10% for these buildings, except where brokers had agreed an appropriate fee for their services with their customers.

Difficulties

Winslow commented that the company understood the difficulties faced by residents living in buildings with combustible cladding or other fire safety risks.

“We support the FCA’s report on insurance for multiple-occupancy buildings, and we broadly agree on the areas where the FCA suggests market remedies should be focused,” he said.

The FCA’s review was provoked by a request in January by former Secretary of State for Levelling Up, Housing and Communities, Michael Gove.

Gove marked the insurance market as failing, lacking transparency and that the role of brokers, managing agents and freeholders was “unclear”.

He wrote to FCA CEO Nikhil Rathi calling for the review saying he was concerned to hear from leaseholders about the pressure they face from increasing premiums on high and medium rise blocks of flats.

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