Insurance Broker Pledge
Updated 8 February 2024
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This publication is available at https://www.gov.uk/government/publications/insurance-broker-pledge-for-leaseholders-in-buildings-over-11m-or-4-storeys-in-height-in-buildings-affected-by-fire-safety-issues/insurance-broker-pledge
Introduction
A number of the most prominent insurance brokers, that provide buildings insurance for multi-occupancy buildings, have each stepped-up to address the concerns around the value and transparency of commissions and commission sharing. Each of these brokers has signed a pledge to help reduce costs and improve disclosure for buildings insurance to residential leaseholders in buildings with fire safety issues.
All of the brokers who have agreed to sign this pledge are committed to address concerns and deliver best practice in the treatment of leaseholders.
The Pledge
The pledge applies to buildings insurance for residential buildings over 4 storeys or 11 metres in height with identified fire safety issues made known to the broker such as a building affected by combustible cladding or other material fire risk issues.
Insurance brokers have each committed to the following points:
1. We commit to stop the practice of sharing commissions with those parties who place/arrange buildings insurance. Those parties include property managing agents, landlords and freeholders. Note: The placer/arranger of insurance will need to determine their own charging arrangements.
2. We commit to having a cap on any retained commission of no more than 15% of the total premium (for all brokerage work including any undertaken by parties on behalf of the broker) on buildings which have or have not yet been remediated.
3. We commit to disclosing our commissions to leaseholders in accordance with Financial Conduct Authority (FCA) regulations (as permitted to do so) if requested and work with third parties to deliver transparency on fees to leaseholders.
The following Insurance Brokers have signed this pledge and are thereby committed to supporting leaseholders and to demonstrate the responsibility we expect of leaders in the UK insurance market:
- Lockton LLP
- Bridge (FlatGuard a trading style of Bridge Insurance Brokers Limited)
- Brown & Brown Insurance Brokers (UK) Limited
- PIB Group Insurance Brokers and St Giles
- Willis Limited (WTW)
- Affinity Select Insurance Services Limited
- Clarke Williams Ltd
- Williams Blackmore Insurance Brokers Limited
- Residentsline Limited
- Langton London Insurance Brokers Ltd
- Brownhill Insurance Group Ltd
- Peter Hattersley & Partners Ltd t/as PHP Insurance
- Hayes Parsons Insurance Brokers
- Howden (a trading style of Howden Insurance Brokers Ltd and Howden UK Brokers Ltd)
- Reich Insurance Brokers Ltd
The pledge is completely voluntary and the decision of each broker to adopt the pledge has been made independently and without discussion with any other brokers. Each broker is free to take further steps in addition to those contained within the pledge.
What leaseholders should expect
This pledge showcases insurance broking best practice. By reducing commission charges on products sold by these brokers, it will have a positive impact on leaseholders’ building insurance premiums, which freeholders charge for in service charge bills.
We encourage freeholders and property managing agents (if they require services from a broker), to use one of the signatories to this pledge. We would also encourage leaseholders to press the placer of insurance for their multi-occupancy building as to whether they are using a broker that has subscribed to the pledge, and to understand any commissions that are being taken by all parties in the insurance value chain. With changes brought in by the FCA to their regulations, leaseholders are entitled from 31 December 2023, to request a range of information relating to their policy from their broker.
We recommend that property management agents (PMAs), landlords and freeholders follow the RICS service charge code and act transparently by sharing information relating to the insurance costs placed on leaseholders and showing that all parts represent fair value. We do not consider commissions that are disconnected from the cost of work undertaken in the placement and management of insurance to represent fair value.
We would also recommend that any brokers subscribed to the pledge but not complying with its terms are reported to the department via brokerspledge@levellingup.gov.uk
A plain English explanation of the pledge is available.
If any brokers not currently involved in the pledge would like further information or to sign-up, please email: brokerspledge@levellingup.gov.uk