Our statement on launch of the ABI’s Fire Safety Reinsurance Facility
It is now 18 months since the FCA recommended that the Association of British Insurers (ABI) “work with the Government to create a risk pooling solution, providing a plan for this solution and its implementation within 2 months”, and that the Department for Levelling Up, Housing and Communities (DLUHC) “consider Government providing financial backing of the risk-pool”.
After failing to meet the Summer 2023 target launch date, the Reinsurance Facility is to launch from 1 April 2024. Whilst we thank the ABI for meeting with us today to explain how the Facility will work, the concerns we have highlighted to the ABI and DLUHC repeatedly over many years have not been allayed.
These include, but are by no means limited to, how many buildings and leaseholders will be helped and how the Facility’s success will be measured – for example, to what extent premiums will reduce. Despite the FCA explicitly requesting estimates of the impact on premiums in its September 2022 Report, the ABI was unable to provide any detail on this.
It is especially disappointing that the Facility will only be available at point of renewal. If the ABI and BIBA had worked at true pace, many leaseholders across the country would not have to wait another year before they can apply.
The Government knows full well that it would be morally decent to provide financial backing for the Facility and to cut Insurance Premium Tax on unsafe buildings. Unfortunately, it continues to ignore all requests to do the right thing and hopes industry will somehow do this on their behalf. In an ongoing cost-of-living crisis, HM Treasury prefers to profit from the misery of victims of the building safety crisis.
Today, our primary concern is that this Facility is set to fail; it will not ensure the positive outcomes we desperately need and deserve. We need the Government to step up and address this ongoing market failure.
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