E&J Estates Leaseholder Insurance Disclosures
Click here to view the new Leaseholder Insurance Disclosures
Background
The insurance market for residential blocks has been difficult and more expensive than historically in recent years. This is largely through better knowledge of the fire risk presented by unsafe cladding and other building defects, which has impacted the residential sector in the round.
Increased weather and escape of water losses are also a feature, as well as “claims inflation” due to the increased cost of materials and shortages of labour. This last feature also led to much higher inflation indexation to sums insured (a problem which has now fortunately ended).
Your landlord is acutely aware that many homeowners have faced higher insurance bills.
Last year however we managed to achieve savings on many (but not all) of our buildings. There were several reasons for this:
What is your plan for the 2026 renewal?
We regularly tender our whole portfolio to all insurers potentially capable and suitable to underwrite the risk. Last year several insurers produced price indications, but none was prepared to undercut our existing insurers.
We also tendered some buildings in isolation where our brokers felt that pricing adjustments were merited. As a result we were able to secure some discounts from our existing insurers.AJG is currently handling the renewal negotiations with both our current buildings insurers, Zurich and Ecclesiastical.
A small number of buildings sustained premium increases where, for instance, claims experience had deteriorated, new building defects were discovered or flood exposure had worsened.
Our brokers will not be undertaking a full portfolio tender exercise this year. The work involved for insurers in analysing a large portfolio is daunting. If they have declined the risk in the previous year and the portfolio has not materially changed, they will not generally give it serious consideration after only 12 months. The best results are generally achieved through a 2 to 3 year full tender cycle.
Our brokers have however asked several alternative insurers to confirm any previous pricing indications they have provided, to give further material to negotiate with our existing insurers.
Our brokers have also analysed the pricing on every one of our buildings on its own features. These include construction type, any fire safety defects, geographic profile, size, claims experience and other considerations.
Where they believe premiums require downward adjustment, they will negotiate hard with insurers.
They will also market some individual buildings with particular issues on a “stand-alone” basis, again with the objective of price reductions.
Full details of the insurers approached and the results will be disclosed in the mandatory, FCA driven Leaseholder Disclosure documents which will be published to you after renewal. These documents will also summarise how homeowner interests have been taken into account in the process.
We cannot speculate at this stage on the results of these negotiations but anticipate that the exercise will be concluded by the middle of February. In the interim, we are not able to provide a running commentary on individual buildings.
We are hopeful however of achieving further reductions on many buildings, particularly those with high rates due to fire safety defects which are now remediated or on their way to that. Our brokers believe that the market is now past “peak pricing” and will be more competitive over the next few years.
Our brokers are aware that our highest priority for our insurance arrangements, beyond sourcing suitable cover, is to reduce costs for our homeowners.
Why do you offer my building to the insurance market as part of your overall portfolio?
There are potentially economies of scale in offering a large portfolio to the insurance market. This approach can also secure cover for buildings difficult to insure in isolation. The Financial Conduct Authority recognised the value of this approach in its Sept 2022 report on insurance for multi-occupancy buildings. As stated however many of our buildings are also offered in isolation. All buildings premiums are priced individually based on their risk to insurers.
Can I see the quotations provided by the insurance market for my property?
Yes. We will distribute this information at renewal within the mandatory Leaseholder Disclosures required by the FCA.
Can I arrange cover for my building outside of the freeholder programme?
Generally not. It is unlikely that adequate cover could be sourced and your freeholder has selected its chosen insurers on a range of specific criteria.
However, we will ask insurers to review premiums further under certain conditions. Please see the FAQ “Can I challenge your insurer’s premium level?”.
Will the insurance declared value of my building increase at renewal and will that affect my premium?
Insurers specify an inflationary increase each renewal. This ensures that the declared value of your building remains adequate to avoid underinsurance in the event of a claim.
Inflation in the cost of construction materials and labour has fallen since the Covid/Ukraine war “spike” and the indexation level for the 2026 renewal is 3.7%.
If your building has recently had a periodic reinstatement cost revaluation this may also affect the sum insured and therefore the premium.
Will my premium reduce when remediation work starts on my building?
Until works are complete, premiums are unlikely to reduce. Once work is complete, insurers’ response will be governed by how fully the risks to the fire resilience of the building itself (not just improvements to life safety) have been addressed.
Should a remediation project be completed in the middle of the insurance year, insurers will consider mid-term premium adjustments if justified. We have achieved a number of positive results for individual buildings where remediation is complete.
Will insurers be given all the risk information on my own property?
Yes. We have gone to considerable lengths to compile detailed construction and building safety information for all our properties. This means that insurers can assess specific risk, and price to reflect that. You can be confident that insurers will have access to any report and information we hold
Where there is a Residents’ Management Company in place and we do not instruct the managing agent, it can be more difficult to obtain this information. We write regularly to all agents reminding them of the importance of responding to information requests.
We cannot provide more specific detail now or answer hypothetical questions. We will keep you informed however through your agent and this site as renewal negotiations progress.