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Gove calls for spiral insurance review for flats with unsafe coating | Insurance sector

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A review of the “crushing” insurance costs faced by residents of some buildings with unsafe coatings is to be undertaken by a government watchdog, at the request of the government.

Michael Gove, the Communities Minister, has asked the Financial Conduct Authority (FCA) to establish within six months why insurance premiums have soared for many customers as work begins after the Grenfell tragedy to remove coating from many sites.

Despite investment and work to identify and resolve coating safety deficiencies in existing buildings and a continued decrease in fire occurrences in multi-unit buildings, he said the insurance premiums for the building had increased significantly for almost all building tenants.

“I am also concerned to learn that many insurers seem reluctant to offer new policies, forcing people to shop in a more limited market with more restrictive terms or less coverage; in many cases trapping people with their current provider,” Gove wrote in a letter to Financial Conduct Authority chief executive Nikhil Rathi.

The Minister said he shared the view of many policyholders who “understandably” do not view the market as effectively providing affordable and widely available insurance.

“The market lacks transparency and there is currently no useful data to explain the logic behind the increase in premiums charged by insurers and the conditions associated with the cover. The role and remuneration of brokers, managing agents and landowners are also unclear. »

A government review of building regulations after the fire – which killed 72 people and injured more than 70 – concluded that indifference and ignorance led to a ‘race to the bottom’ in building practices. building security, cost favoring security.

A nationwide ban was introduced on the use of combustible linings on new buildings, and sprinklers became mandatory on new construction over 11 metres.

The total cost of fire safety work on all affected blocks has been estimated at around £15 billion. In June last year, the government committed around £5billion through the Building Safety Fund to remove flammable coatings from high-rise buildings.

But under the tenancy system in England and Wales, the cost is often borne by individual apartment owners, some of whom find themselves with spiraling insurance costs, service charges and high fees. for 24-hour “standby” fire patrols.

Gove last week threatened to ban makers of combustible cladding and insulation from trading in the UK unless they pay to fix unsafe housing, giving businesses a March deadline to agree a regulation.

In a letter to industry, he highlighted more than £700million in profits made over the past four years by the three companies most closely associated with the Grenfell disaster – likely Arconic, Celotex and Kingspan, which have fabricated combustible facing panels and insulation. moss on Grenfell Tower.

Earlier this year, Britain’s biggest homebuilders told the government they shouldn’t be the only ones to pay the potential £4billion cost of tackling fire safety issues in apartment blocks. dwelling.

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