New tenant transparency boosts commercial insurance broker in Leeds

Roger Gaunt, MD Commercial Insurance Broker, Gauntlet Group

TCreating more transparency for tenants requiring a property insurance solution has led to a boom in demand for property quotes from commercial insurance broker, Gauntlet Group.

The Financial Conduct Authority (FCA) introduced new reforms at the end of 2023 which now prevent brokers from paying unauthorized commissions to estate agents or landlords just to secure their insurance business.

The FCA felt compelled to intervene after property insurance premiums began to rise sharply following the Grenfell Tower tragedy and when the supply of insurance cover for some buildings began to decrease.

The FCA also found that insurers’ commission levels rose by 40% in the three years between January 2019 and September 2022. Since the commissions were paid to those responsible for arranging the protection of the tenants’ property, the commissions were abnormally high, both for the broker and the agent or the lessor when cutting.

Now the FCA has clarified that a property management agent or landlord cannot recommend an insurance policy based on the level of commission or remuneration associated with it. It is essential to provide tenants with fair value and to let tenants know exactly why the insurance policy is being proposed, what value they will get from it and the exact pricing breakdown behind it.

A proposal presented to tenants in a language they understand must take into account factors such as cover and costs, exclusions, excesses, limitations and conditions.

This new situation is leading property management agents and landlords to explore non-traditional avenues for property insurance beyond the brokers who paid them a commission to recommend a particular policy. As part of this process, Gauntlet Group is experiencing a boom in demand for property insurance quotes, both for multi-apartment buildings and other tenant-occupied buildings.

Although based in Yorkshire, the broker is securing new clients in the property sector across the UK through its relationships with insurers and access to schemes.

Notably, although the inspiration for the FCA’s action – supported by the Department for Equalization, Housing and Communities – was apartment building insurance, the new regulations apply to any property that is a rented dwelling in the UK. The only exceptions are those that are leased to businesses and those where tenants pay general rent and do not receive insurance premiums as an itemized cost.

“Landlords and estate agents need to seek better solutions for their tenants – one that embodies and represents the ‘fair value’ that the FCA insists on,” says Roger Gaunt, chief executive of the Gauntlet Group. “Because we have such a large market reach and buying power, these brokers find that we can offer their renters not only policies at competitive prices, but also property policies that offer better coverage than they may have previously enjoyed.”

As commissions were removed from the policies, a closer look at the details reveals that many of them did not provide good value for money. These property insurance options do not stand up to scrutiny when compared to other property policies that offer more protection or have lower premiums. The beneficiaries of this are tenants whose agents and landlords turn to Gauntlet Group to assess their property insurance options.

“We are already helping to deliver the real value that the FCA envisioned and this is benefiting those tenants who have been paying over the odds for their insurance protection simply because so many commissions have been factored into the price,” says Roger Gaunt.

“The new regulations are extremely beneficial for tenants if their property management agents and landlords embrace the ethos behind them and actively seek better options for their tenants.”

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