UK regulators set on trail of ‘crippling’ insurance rate hikes for high-rise housing
UK regulators will be unleashed on the insurance industry to flesh out reports of “crippling” price increases for high-rise residential property and to consider intervention.
Secretary of State for Levelling Up, Housing and Communities Michael Gove has called upon the Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA) to investigate the price increases, coverage restrictions and outright new policy refusals that have followed the Grenfell Tower Tragedy.
Gove is “extremely concerned” on reports of “rapidly escalating building insurance premiums,” sometimes in excess of 100% year on year, “leaving residents with crippling costs,” the housing minister wrote in correspondence to the FCA and CMA.
"It is clear to me that the insurance market is failing some leaseholders," Gove wrote.
Gove needs regulators to cut through what he suggests is an industry smoke screen. “The market lacks transparency” and the data are missing that might explain pricing, coverage conditions and the role and remuneration of brokers, managing agents and freeholders, Gove argued.
The CMA offered a quick shot of support to the initiative, concurring that premiums have become “a source of significant concern,” CMA chief Andrea Coscelli wrote in response.
The FCA, in its written response to the minister, claimed to already be on the case, having begun data collection and having warned brokers and insurers, just today, of the regulator’s pending information and advisory needs.
FCA chief Nikhil Rathi sees grounds for some increase in risk pricing, but can't tell if customers are still getting fair value, he said in his written response.
Unsafe cladding and other building defects have all increased risk perceptions, he said. “There is increased understanding of the likely scale of claims associated with large multi-occupancy buildings affected by building defects,” he wrote.
Repeatedly naming the need for fair value to customers, Rathi vows an “intention to intervene further if we identify that insurers, brokers or regulated property managers are not fulfilling their regulatory responsibilities”.
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