Gove calls for flat insurance probe as costs soar

The insurance market is "failing" some leaseholders living in blocks of flats due to premiums "rapidly escalating" following the Grenfell Tower tragedy, the housing secretary has said.

As a result, Michael Gove has called on the UK's financial regulator to review the buildings insurance market.

He said despite progress to remove dangerous cladding, premiums had "increased dramatically".

Some leaseholders had seen insurance costs more than double, he added.

Mr Gove has asked the Financial Conduct Authority to "shed light" on the rises.

In the letter to the regulator, he said he had heard from "innumerable" leaseholders about the pressure they face from escalating building insurance premiums on high and medium-rise blocks of flats.

He warned a lack of new policies being offered from insurers was forcing people to shop in a limited market place and "in many cases, trapping people with their current provider".

"It is clear to me that the insurance market is failing some leaseholders," he added.

Mr Gove said despite progress in removing dangerous cladding, including the combustible ACM type from 85% of high-rise blocks found to have it installed, building insurance premiums had "increased dramatically for almost all leaseholders in blocks of flats".

"Understandably, many policyholders do not view the market as effectively delivering accessibly priced, widely available insurance," he said. "I share that view, and do not consider this an acceptable situation."

Mr Gove said the market lacked transparency and there was not currently any "useful data" to explain insurers rationale behind increasing charges.

In the wake of the Grenfell fire, which killed 72 people in 2017, flammable cladding and other fire safety defects have been discovered in hundreds of blocks of flats across the UK.

Removing cladding can cost millions of pounds per block, with the cost often being borne by individual flat owners, under the leasehold system in England and Wales.

It has left many with crippling bills to fix unsafe homes.

However, the government has promised to pay to remove cladding in high-rise flats, and in January, Mr Gove announced that people living in blocks between 11m and 18m high would also not face the costs of remedial works.

He said businesses who manufactured combustible cladding and insulation "must pay now, instead of leaseholders".

Mr Gove has requested that the Financial Conduct Authority works with the Competition and Markets Authority to review the sector to find out the "underlying causes of year-on-year price increases" and the causes of the "marked restriction in coverage available for multiple-occupancy buildings".

"My overall goal is for there to be a more affordable marketplace for buildings insurance that offers widely available and affordable cover for those who live in flats and other multiple-occupancy buildings," he said.

He has asked the regulator provides feedback within three months, with a final report in six months.