For blocks of flats insurance, transparency is no longer optional, it is now central. For those managing blocks of flats or apartments, understanding the evolving landscape is vital.
The Financial Conduct Authority has introduced new rules on multi-occupancy building insurance that affect disclosure, commissions, product design and, ultimately, the value delivered to leaseholders.
In this article, we will explore the journey of these reforms, explain what must now be disclosed, how to interpret the summary for your block, and the role that risk data and mitigation play in securing better terms.
The Journey to Greater Transparency
The FCA’s attention to multi-occupancy building insurance began in earnest with its 2022 review, which revealed that leaseholders often bore high premiums, hidden commissions and limited visibility of the policy arrangements.
In April 2023 the FCA issued a press release signalling its proposals: leaseholders should be regarded as customers of the policy, products must be designed with their interests in mind and remuneration practices should not undermine fair value.
Later in 2023, the FCA published its Policy Statement PS 23/14, which set out the final rule changes including mandatory disclosures and fair value requirements for multi-occupancy building insurance.
These reforms mark a significant shift. Previously, freeholders or managing agents negotiated the block policy and leaseholders simply paid the premiums via the service charge. Now it is the right of the leaseholders to see how their premiums are broken down, how commissions are paid, how alternatives were considered and to ask questions about value.
What Must Be Disclosed?
Under the multi-occupancy building insurance rules, the following disclosures apply to leaseholders of blocks of flats:
- Policy summary: There must be a clear summary of the cover: what is included, what is excluded, the building(s) covered, sums insured and duration.
- Pricing information: Disclosure must include how the premium is composed at the building level, in terms of tax, and, in some cases, a per-unit amount.
- Remuneration and fees: Brokers and intermediaries must disclose total remuneration (commission and fees) for arranging the policy, including amounts passed to other parties such as managing agents or freeholders.
- Conflicts of interest: Any relationships between the broker, insurer, freeholder or managing agent that might influence choice of policy (for example, where placement decisions are driven by commission rather than cover) must be disclosed.
- Alternative quotes and rationale: The number of alternative quotes obtained must be included (and access to further detail provided on request) plus a brief explanation of why the selected policy was considered in the best interests of both the freeholder and leaseholders.
Collectively, these disclosures give leaseholders the information they need to engage with the insurance placement process, challenge arrangements if needed and ensure that the service-charge element (the portion of the premium they pay) represents fair value.
Risk Data, Documented Mitigations and Better Terms
One of the key levers for securing competitive terms under these new rules is the quality of your risk-data and mitigations. Insurers increasingly require meaningful information about building safety, external wall fire risk, management of communal areas, maintenance logs and proactive risk-management steps.
When you present a well-documented risk-profile, brokers can place the policy more favourably, demonstrate to insurers that the building is well managed and ultimately better justify premium levels and commission structures.
In practice this means:
- Keeping up-to-date fire risk assessments and external wall fire risk assessments (and referencing standards such as PAS 9980).
- A digital record or “golden thread” of compliance, maintenance and inspection logs.
- Evidence of proactive remedial work, servicing, asset registers and lifecycle plans.
- Transparent service-charge accounting so that leaseholders can clearly see what their contributions are delivering.
By integrating robust risk-data and mitigation documentation into your insurance renewal process, the transparency required by the FCA becomes a competitive advantage rather than a burden. It supports your negotiating position and helps justify that the terms, cover and value align with what leaseholders are paying.
What This Means for Freeholders, Resident Management Companies and Leaseholders
For freeholders or RMCs it means shifting from purely selecting a policy to managing the whole placement process in line with fair-value expectations. You must ensure that costs passed to leaseholders are justified by service, cover and risk-mitigation and that the disclosure pack is provided promptly.
For leaseholders it means greater visibility and voice. You now have the right to see how your service charge premium is allocated, what you are getting for it, and to ask questions where value seems weak. That does not mean negotiating each renewal, but it does mean having the tools to understand, challenge and engage.
Conclusion
The FCA’s multi-occupancy building insurance reforms mark a vital step in bringing building-insurance arrangements into the daylight. The disclosures on policy cover, pricing, remuneration and placement rationale are powerful tools for assessing whether your block policy offers fair value.
Meanwhile, the stronger link between risk-data, mitigations and insurance terms means that blocks prepared with good documentation stand to benefit most.
At a time when service charges are under scrutiny, ensuring that your block policy is priced fairly, delivers value and is transparent is both sound financial practice and good governance. As you approach renewals or review your policy arrangements, use the new disclosure regime as an opportunity and not just a compliance exercise to ensure every pound spent on insurance is delivering as it should.
