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Fire Safety Reinsurance Facility

McGill and Partners and the ABI have launched a Fire Safety Reinsurance Facility to help improve the availability of insurance for higher-risk residential buildings awaiting work to fix fire safety issues.  

The Facility is intended to be in place for between three and five years whilst remediation takes place. After that time, buildings should be safer, and the Facility would no longer be needed.  

Further information can be found below to help answer questions for leaseholders, for freeholders or property managing agents responsible for taking out the building insurance policy and for the wider insurance industry. The British Insurance Brokers Association (BIBA) has also been involved and will be actively engaged in making sure brokers can use the Facility and more advice for brokers is available on BIBA’s website. 

How it Works

Five insurance firms – Allianz, Aviva, Axa, RSA and Zurich - will enter buildings into the Facility from 1 April 2024 onwards. Other insurance companies who are interested in participating in the Facility should contact McGill and Partners. 

When the buildings insurance policy is due for renewal, the person or company responsible for arranging the insurance cover should contact their existing broker or insurer as usual.

Insurers will proactively consider which of the buildings they currently insure would be suitable to be entered into the Facility at the point of renewal. Where a broker is used, the broker should also speak with participating insurers to see if the building can be considered for entry, alongside looking across the wider market as they usually would to find the right cover for the building’s needs. 
The broker will provide recommendations to the person or company responsible for arranging the insurance cover as they usually would. 

The Facility will be available for properties across England, Wales, Scotland and Northern Ireland.  


How can a building be entered to the Fire Safety Reinsurance Facility?

If you are responsible for purchasing the buildings insurance for the building (usually this is the freeholder or managing agent), you should speak to your existing broker or insurer in advance of your next renewal.   

Your broker or insurer will be able to discuss whether the building can be covered by the Facility, or, for brokers, if they can find you an alternative competitive deal elsewhere. Brokers will demonstrate that the policy they recommend offers fair value for their customers. 

Which buildings can be entered into the Facility?

The Facility has been designed to help multi-occupancy residential buildings where fire safety issues have been identified and remediation is required. While there are no specific criteria that a building needs to meet, any building where the owner has a legal duty to remediate it to make sure it is safe will need to have a remediation plan in place.  

It will remain a commercial decision on a case-by-case basis for each individual insurer to decide whether to enter a building into the Facility, taking into account other risks associated with that building (for example floods or storms), other buildings they might insure and their overall ability to provide cover for these buildings should there be a major incident with an associated high-cost claim.  

How will the premium be calculated?

Premiums are calculated by insurers on an individual, case-by-case basis taking into account a range of factors and the Facility operates in the same way. The final costs leaseholders are asked to pay will include the premium as set out by the insurers involved in the Facility, as well as any additional fees and costs charged by others in the supply chain such as brokers and managing agents. We expect any additional charges for leaseholders to be clearly set out and to demonstrate fair value. 

As with all buildings insurance policies, premiums will continue to be based on a variety of risk factors, such as the rebuilding cost, type and age of the building, previous claims history and other property risks such as storms or flooding and the risk of subsidence or escape of water. External factors such as construction costs and supply shortages will also impact premiums for buildings entered into the Facility, as with any other building. 

More information on what buildings insurance policies cover is available here. 

Can the existing policy be cancelled so that a building can be entered?

The Facility has been designed to work when the buildings insurance comes up for renewalWhen a policy is due for renewal, we’d advise those responsible for purchasing buildings insurance to speak with their broker or insurer.

Will it be necessary to use a broker?

Whoever is responsible for purchasing buildings insurance should continue to work with their broker, or their insurer where the policy has previously been arranged directly. Brokers are best placed to look across the whole market and provide advice on the most appropriate cover for the building’s needs. 

If you need to find an insurance broker contact BIBA’s Find Insurance Service on 0370 950 1790 or online.   

Will Insurance Premium Tax (IPT) be charged on any insurance policy arranged through the facility?

Yes. Insurance Premium Tax is 12% of the premium and is set by the government. Whilst the ABI has called on them to consider removing the tax for such building insurance policies, which would instantly result in 12% reduction for all those impacted, for now IPT continues to apply. 

How will the Facility look to reduce insurance costs or help boost competition?

One of the drivers behind increased insurance costs has been the lack of capacity within the buildings insurance market to take on the risk of affected buildings. Where there are fire safety issues such as combustible cladding or insulation or missing fire breaks, the risk of the whole building being destroyed in the event of a fire remains significant. Some insurers who provide this cover have been unable to solely take on the risk for such a building. Some insurers have been able to share the risk with other firms, but we know that this has resulted in expensive ‘layered’ insurance.  

The Facility looks to reverse this. Firstly, when a building is entered into the Facility one insurance firm will more likely be able to provide 100% of the cover for a building on its own again as a group of reinsurers will share the risk with them. Secondly, it should help to increase the amount of capacity within the market to offer cover to more buildings. In doing so, it is hoped to boost competition within the wider industry and, in the longer term, encourage more insurers to start offering cover again – either through joining the facility or on their own. 

How long will the Facility run for?

The Facility will be time-limited to between three to five years whilst work to fix fire safety issues on buildings takes place. We continue to urge the government and developers to progress this work as swiftly as possible as, ultimately, remediating to reduce the fire risk on the buildings is the only solution.

Our building is currently insured by one of the firms involved – will I hear from them directly about next steps?

Insurers will proactively consider which of the buildings they currently insure would be suitable to be entered into the Facility. The person who arranges the buildings insurance, should also contact their broker or insurer at the point of renewal. We will be working with the firms involved, and the British Insurance Brokers’ Association will ensure brokers are aware of the facility.

How can we find out if our building will be entered?

Leaseholders should contact the person or company who would usually arrange the buildings insurance to understand what type of insurance their building has. It is unlikely that the leaseholder would be informed if their building was in the Facility or not – insurers do not usually share how reinsurance is operating to a customer. 

We continue to support the FCA’s work to ensure leaseholders have sufficient information about the policy and join their call to make it a legislative requirement for freeholders to share relevant information with their leaseholders. 

What should leaseholders do if there are concerns the freeholder or whoever is responsible for taking out the insurance policy isn’t acting in their best interests?

The Leasehold Advisory Service should provide advice to those who do not believe their freeholder is acting in their best interestsFurther information is available at https://www.lease-advice.org/ 

As an insurance firm, who should we contact if we want to consider joining the facility?

Any insurance company interested in knowing more about joining should contact McGill and Partners. 

Does an insurance firm need to be an ABI member to join?

The Facility is open to any UK insurance firm. ABI members are the founding firms but we hope in time more insurers, whether ABI members or not, will either join or look to offer competitive prices in the wider market. 

What will happen once work has been undertaken to fix the fire safety issues to a building?

We have previously confirmed that a number of insurers, including the five firms involved in the facility, have committed to review the premium for high-risk residential buildings once all building safety works have been completed to a sufficient standard.  

If customers would like to switch insurers after remediation works have taken place, then the same firms have committed to waive any mid-term cancellation fees that might be included in the policy for that particular building. This will mean that building managers, and ultimately leaseholders, can benefit from the potential to obtain a wider range of insurance quotes from the moment the building has been made safer through remediation. 

What do insurers need to see has been fixed on an affected building before they can consider it to be a lower fire risk?

Our members will want to see that a building has been repaired to a standard that saves both lives and the property. Life safety is the priority to ensure everyone can be safely evacuated, but insurers would also want to see changes that prevent the whole building from being damaged.