Leasehold reforms set to intensify scrutiny of insurance commissions

Brokers and property managing agents could face increased scrutiny over insurance commission-sharing arrangements as new leasehold reforms drive greater transparency across the insurance distribution chain, compliance specialist Branko Bjelobaba has warned. 

Speaking at a CII webinar on 28 September 2026, Bjelobaba said concerns around remuneration in property owners’ insurance had not disappeared following the FCA’s intervention in the market and could come under renewed focus as the government progresses plans to reform leasehold insurance.

The comments come amid a wider government overhaul of leasehold, which began with the Leasehold and Freehold Reform Act becoming law in May 2024.

The government has since consulted on replacing commission-sharing arrangements for building insurance with a transparent permitted fee, and on 15 July 2026, confirmed it would introduce such a payment alongside wider measures to improve transparency around service charges.

Further legislation is expected later this year, while ministers are also working to make commonhold the default tenure for new flats

Fair value focus

Bjelobaba said brokers must be able to demonstrate that remuneration paid throughout the insurance distribution chain represents fair value for leaseholders.

“If you’re getting paid more commission, you have to evidence that you’re doing more work that’s legit,” he said.

“This is not just, ‘let’s screw more money out of the insurer.’”

He said brokers should be able to show what services a property managing agent provides in return for any commission and whether those services directly benefit the leaseholder.

Bjelobaba also questioned whether additional commissions could be used to circumvent existing remuneration requirements.

Transparency reforms

His comments follow an Insurance Times briefing earlier this year, which warned brokers could be “on thin ice” where commission-sharing with property managing agents and freeholders is concerned.

The government said in July 2026 that it would introduce measures aimed at improving transparency around building insurance arrangements.

The proposals include disclosure requirements covering relevant connections and remuneration arrangements involving landlords, managing agents, brokers and insurers.

The government is also considering requirements around how insurance quotes are obtained and selected, with leaseholders set to receive more information in a standardised and accessible format.

Bjelobaba said the planned reforms were likely to bring remuneration arrangements under even greater scrutiny.

“Current sharing of commissions will end,” he said.

He questioned whether premiums could fall if payments to other parties in the distribution chain were removed.

“If that other party now no longer can be paid, well, we’re paying you too much then, aren’t we?” he said.

“We’re only going to pay you for what you’re doing.”

Documentation and evidence

Bjelobaba also highlighted the importance of documenting decisions and remuneration arrangements, warning that brokers could face scrutiny if their files did not evidence why payments had been made.

He said firms should be prepared to demonstrate that insurance arrangements were “fair, competitive [and] defensible”.

The webinar also covered the High Court’s decision in the Trocadero case, where commission paid by an insurance broker to a landlord was found not to be recoverable from a tenant as part of insurance rent.

Bjelobaba said the judgement reinforced the need for brokers to examine lease wording closely and understand whether commission arrangements could ultimately be recovered from occupiers.