The government has agreed a pledge with five insurance brokers which it says could mean thousands of leaseholders in buildings with identified fire safety issues seeing a significant reduction in their insurance premiums.
According to the government, the brokers have committed to stop the practice of sharing commissions with parties who place or arrange buildings insurance, such as property managing agents, landlords and freeholders.
They are also promising to have a cap of 15% on the proportion of the premium that brokers take to compensate for their work in arranging the insurance. A Financial Conduct Authority (FCA) report on broker remuneration found that this amount can be as high as 60% of the cost of the premium paid by leaseholders.
The government says the pledge will benefit leaseholders living in buildings over four storeys or 11m in height with identified fire safety defects, which have been made known to their insurance brokers.
Minister for Building Safety Lee Rowley said: “I strongly welcome the decision of these brokers to step up and demonstrate their willingness to do more on bringing premiums down.
“These brokers are to be congratulated on their decision; we now need to see further action from others in the broader insurance and broker industry to accompany it.”
The brokers that have individually taken the voluntary decision to sign up to the pledge are Lockton LLP, Bridge Insurance Brokers, Brown & Brown Insurance Brokers (UK) Limited, PIB Group Insurance Brokers/ St Giles, and Willis Limited (WTW).
The brokers have also confirmed their commitment under new FCA rules, from 31 December 2023, to share information about the buildings insurance policy with leaseholders if requested.
The companies will act with immediate effect for new policies and the government says it will monitor the adherence to and impact of the pledge.