Now the Fire Safety Reinsurance Facility is here, please find what it is and key points:
Purpose: The Facility aims to improve access to insurance for higher-risk residential buildings with combustible cladding and other fire safety issues.
Duration: It will be in place for three to five years while remediation work occurs.
Insurers: Participating insurers include Allianz, Aviva, Axa, RSA, and Zurich.
How It Works: Insurers will enter higher-risk buildings they currently insure (awaiting remediation) into the Facility at annual renewal. This allows them to expand capacity for writing insurance for affected buildings.
Impact: Buildings with costly ‘layered’ insurance will likely benefit most from the Facility, replacing their coverage with more affordable options12.
On 1 April 2024, the Association of British Insurers (ABI) launched a ‘Fire Safety Reinsurance Facility’, which aims to improve access to affordable insurance for buildings with combustible cladding and other fire safety issues. The Facility is open to all building owners, including housing associations, and was created in response to the 2022 government-requested review into the buildings insurance sector, led by the Financial Conduct Authority.
The Facility is designed to help owners of multi-occupancy residential buildings where fire safety issues have been identified and remediation is required. There are no specific criteria that a building needs to meet to be considered under the Facility. The ABI has said that each insurance decision will still be a case-by-case commercial decision with no guarantees of either entry into the Facility or changes to insurance policy upon entry.
The British Insurance Brokers Association has separately said that buildings which currently have costly ‘layered’ insurance schemes in place will likely see the most benefit from the Facility. The scheme is currently backed by the ‘big 5’ insurance companies in the sector: Allianz, Aviva, Axa, RSA and Zurich. In the longer term, the Facility is open to other insurance companies joining and the ABI hopes that it will reinvigorate competition in the market and encourage other firms to write more business for affected buildings.
Applications by building owners for insurance cover under the Facility can be made at the point of policy renewal and building owners should contact their existing broker or insurer as usual.
We know that housing associations are experiencing considerable challenges securing affordable buildings insurance, and that this is affecting buildings whether or not they need remedial works for safety defects. We are conscious that this scheme does not solve the problem for the sector in its entirety and are raising these challenges with the government.
Source – housing.org.uk
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