Insurance Commissions – Is This the Beginning of the End?

The brokers that have individually taken the voluntary decision to sign up to the pledge are: Lockton LLP, Bridge Insurance Brokers, Brown & Brown Insurance Brokers (UK) Limited, PIB Group Insurance Brokers / St Giles, and Willis Limited (WTW). These brokers who have signed up to the pledge have also confirmed their commitment under new FCA rules, from 31 December 2023, to share information about the buildings insurance policy with leaseholders if requested.

We here at Casserly Property Management agree with the comments made by Andrew Bulmer, Chief Executive of The Property Institute:

“The new pledge is another step by Government to improve transparency for leaseholders by capping the fee a broker can take, and requiring brokers to give leaseholders access to the fee information they need. The pledge only applies to a limited number of buildings with safety defects, but the direction of travel for all has already been set by the FCA requiring brokers to ensure fees represent ‘fair value’. It will not come as any surprise to The Property Institute members and the wider sector given the Government’s clear stance, and we should expect more concrete action on commissions in the upcoming King’s Speech next week.

We highlight that an end to the sharing of insurance commissions by these brokers does not mean the banning of remuneration for work done by the managing agents they work with. Property managers do work in placing insurance, collecting premiums and managing claims, and can still be paid for that work. The ARMA Consumer Charter & Standards and RICS Service Charge Code has long required proportional fees for work done, and these can be raised transparently through the service charge in the usual way."