All insurers should offer capacity for cladding-affected risks, says Aviva’s Adam Winslow

Our industry has a long track record of helping customers when they need it most. From the emergency support we’ve given to customers affected by this summer’s wildfires, to the thousands of homeowners and businesses that we help to recover from flooding every year, we can be rightly proud of the support we provide when the worst happens.

Which is why I am surprised that the industry has not responded to the cladding crisis by offering greater capacity to new customers living in buildings with combustible cladding. Leaseholders in these buildings have faced significant financial pressure and emotional distress while living with the knowledge that their home is a fire risk.

Leaseholders in these buildings with combustible cladding have faced significant financial pressure and emotional distress while living with the knowledge that their home is a fire risk. I don’t believe that any insurer wants to put their customers in this position.”

Although this is not a problem that has been created by insurers, we do have a role to play in helping leaseholders, who find themselves in this situation, by offering access to a sustainable insurance solution while their building undergoes works to remove combustible cladding. Yet some leaseholders have experienced steep premium increases, high excesses and difficulty in accessing cover.

I don’t believe that any insurer wants to put their customers in this position. Helping these leaseholders is not just the right thing to do, it is what the insurance industry does best.

Offering insurance to these leaseholders is wholly viable. Aviva has always stood by its existing customers living in buildings with combustible cladding, and in April 2021 we offered our standard residential buildings insurance to new customers living in buildings with combustible cladding.

Providing a lifeline

By opening up to new business, we provided a lifeline to those leaseholders – mainly residents’ associations – who could not find an insurance solution in their current situation. We remain the only insurer that has offered capacity to new customers in this market. That’s not what we intended – we hoped that by showing that it was possible to offer a completely workable solution, the rest of the market would follow.

We hoped that by showing that it was possible to offer a completely workable solution, the rest of the market would follow.”

Since our launch, we’ve provided insurance for more than 6400 leaseholders who will benefit from stable pricing and the confidence of having an insurer by their side for the duration of the remediation works. And that number keeps growing.

Around 5200 customers have seen an average premium saving of 60% since insuring with Aviva. More than 1200 of these new customers came to us without any insurance in place due to their inability to secure cover elsewhere. Our standard excess is set at £500 to ensure customers are protected against a range of losses.

To further minimise cost and provide transparency, we are encouraging brokers to place business without commission, and instead agree a fee for their services with their customers. Where brokers charge a commission as opposed to a fee, we have capped the commission payable in an effort to manage the cost of insurance that is paid for by leaseholders.

Additional market capacity

Providing additional market capacity and opening to new business is not the giant leap that some may envisage – it is merely an extension of existing property owners’ books.

If insurers can’t proactively provide greater capacity to cover these risks, the government will intervene. Inevitably, the industry’s reputation will take a knock if we are forced into action. Such an event would feel like an own goal for an industry that pays out billions to customers every year and prides itself on helping our customers in need.

If insurers can’t proactively provide greater capacity to cover these risks, the government will intervene. Such an event would feel like an own goal for an industry that pays out billions to customers every year and prides itself on helping our customers in need.”

The insurance industry has been looking at how it can support leaseholders living in cladding affected buildings, and Aviva and other insurers have committed to the Association of British Insurers’ support measures of reducing premiums post-remediation and waiving mid-term cancellation fees. However, the industry can do even more to help leaseholders.

If other insurers were to join us in offering capacity to new cladding-affected risks, then collectively we would be able to ensure that all leaseholders living in buildings with combustible cladding benefit from fairly priced insurance. And that is something we could all feel proud of.