Link(s): Exchange of letters and work on multiple-occupancy residential buildings insurance | FCA
Context
In Dear CEO letters to insurance firms and brokers, the FCA has outlined work it is carrying out in the insurance market for multiple-occupancy residential buildings. It has also responded to a letter from the Department for Levelling Up, Housing and Communities (DLUHC) on this issue. The Dear CEO letters are a response to a request in the letter from the DLUHC for the FCA to review the availability and cost of buildings insurance for multiple-occupancy residential buildings.
Key points to note
- The FCA accepts that insurance premiums are just one aspect of the rising costs faced by residential leaseholders, but it wants to ensure products provide fair value and premiums fairly and accurately reflect risk.
- The letters outline the work which includes examining firms’ approaches to pricing for multi-occupancy buildings and whether elements unrelated to risk such as commissions are driving up costs. The letters also remind firms of their obligations under our rules, which for intermediaries include reminders about:
- adequate resources (knowledge and expertise in place)
- ensuring they do not adversely impact the value of products they offer (a key part of this is ensuring the commission they receive has a reasonable relationship to the benefits their services provide and the costs they incur in providing services)
- considering the costs borne by leaseholders when determining whether a product is fair value
- steps brokers should take when operating under delegated authorities, and when broking generally
- information that the FCA will collect from brokers and insurers to allow it to assist in this work
- The FCA is asking firms to consider what actions they can take to help leaseholders, whether individually or by identifying collective solutions as an industry.
- This work will be done with the Competition and Markets Authority where appropriate.
Next actions
None – for information and awareness