’We now need to see further action from others in the broader insurance and broker industry,’ says minister
Five UK broking groups have made a commitment to stop sharing buildings insurance commissions with landlords and to cap their own fees.
A report by the Financial Times yesterday (29 October 2023) stated that Willis Towers Watson, Lockton, Brown and Brown, Bridge and Pib had agreed with the government to make the move in a bid to cut costs.
The pledge means that these firms will stop sharing their commissions with third-parties, such as landlords, managing agents and freeholders, on buildings over 11 metres in height with identified fire safety issues made known, like a building affected by combustible cladding or other material risk issues.
They will also caps their fees at 15% as part of the commitment.
Lee Rowley, minister for building safety, said the move demonstrated the brokers’ “willingness to do more on bringing premiums down”.
“These brokers are to be congratulated on their decision,” he was quoted by the Financial Times as saying.
“We now need to see further action from others in the broader insurance and broker industry to accompany it.”
This came after the FCA revealed in April 2023 that broker remuneration for insurance of multiple-occupancy residential buildings rose over a three year period.
Last month (29 September 2023), the regulator announced it would force insurance firms to act in leaseholders’ best interests from 1 January 2024.
As part of this, firms will be banned from recommending an insurance policy based on commission or remuneration levels.
Following this, Biba launched a new fair value assessment framework to help members implement or refine their own fair value models for customers and operating models.
“Biba members are committed to providing fair value to the customers they serve, as well as the new policy stakeholders created in relation to multi-occupancy properties, reinforcing the core principle that the broker is the agent of the customer and acts in their best interest,” Biba chief executive Graeme Trudgill said.
“The new fair value assessment framework will help our members to demonstrate the value they provide to customers and it can be applied by member firms of all different sizes.”
His career began in 2019, when he joined a local north London newspaper after graduating from the University of Sheffield with a first-class honours degree in journalism.
Now working within the insurance sector, James has a particular focus on motor, M&A activity and financial reporting.View full Profile