Multi-occupancy building insurance: Latest tribunal decision
The Word readers will be aware of the FCA’s recent intervention into multi-occupancy buildings arrangements, which culminated in FCA Policy Statement PS23/14 (PS23/14: Multi-occupancy building insurance: Feedback to CP23/8 and final rules (fca.org.uk)) (the MOBI Regs).
The MOBI Regs sought to address perceived issues over fair value, conflicts of interest, and opaque sales practices, which in some cases saw leaseholders being contractually obliged to pay towards property premiums, which were uncompetitively high.
A recent First-Tier Tribunal Property Chamber decision
In a recent First-Tier Tribunal Property Chamber decision, the Tribunal found that E&J Estates, a company that manages over 1600 buildings across the UK, overcharged leaseholders in flats at Hollins Court Bank in Blackburn for four years. The total insurance policy costs for the building amounted to approximately £27,000 per year from 2021 to 2023. The leaseholders argued that these costs were unreasonable and that the premiums were inflated. They claimed that an alternative insurer would cover the building for only £12,000 per year. Despite two professional witnesses making their case for the defence, the tribunal found their evidence to be lacking credibility; stating that it was contradictory and lacking transparency.
The Tribunal agreed that the leaseholders had been overcharged. The Tribunal also found that there were a number of conflicts of interest, owing to various personal connections between directors of the brokers, and those of the captive through which the insurance was placed.
What the decision means for leaseholders and insurers
This decision shows that not only is the FCA looking closely at insurance arrangements for multi-occupancy properties, but so are the Tribunals. It is also clear that the Tribunals will carefully consider the arrangements between the various parties, and the amount of the premium being charged (and ultimately paid by the leaseholders). Those involved in the distribution of such polices should be mindful of the ever-increasing scrutiny and ensure that all arrangements are transparent, provide fair value, and take account of the interests of the leaseholders.
Contents
- The Word, July 2024
- It’s not cricket: Insurers change their mind about jurisdiction
- Words matter: Another case on the importance of accurate drafting
- Navigating Oil Price Cap legislation: LMA issues revised Cargo and Hull wordings
- London Fire Brigade to stop attending for automatic fire alarms: Implications for insurers
- How might AI impact insurer climate targets?
Key contact
Tim Johnson
Partner
tim.johnson@brownejacobson.com
+44 (0)115 976 6557
Discover more
You may be interested in...
Legal Update - The Word
The Word, December 2024
Legal Update
Walking the fine line: The statutory duty of candour and insurance
Legal Update
FCA launches consultation on broker remuneration for multi-occupancy buildings insurance
Legal Update
AI is creating fraudulent claims
Legal Update
Shoplifting epidemic by organised criminal gangs: The impact for insurers
Legal Update
Death and disgrace policies: What can insurers learn about the allegations against Gregg Wallace?
Legal Update
Insurance complaints surge continues
Legal Update
The ‘grate’ cheese robbery: Implications for insurance professionals
Legal Update
Environmental crime and the impact for insurers
Legal Update
What might a Trump victory mean for the UK insurance industry?
Legal Update
Post Office scandal: Lessons for underwriters
Legal Update
Weather protection parametric insurance: A sign of things to come?
Legal Update - The Word
The Word, November 2024
Legal Update - The Word
The Word, October 2024
Legal Update
Updates to the UK’s Arbitration Bill
Legal Update
Ozempic: The rising costs and coverage issues of weight loss medication
Legal Update
ICAEW: Changes to PII requirements
Legal Update
Contractor insolvency: Peabody Trust v NHBC
Legal Update
By a narrow 2 to 1 majority, the Court of Appeal finds in favour of insurers in the construction of an exclusion clause in a W&I policy
Legal Update
LMA binders’ consultation
Legal Update
Smooth sailing ahead: The LMA's new Open Form Default Clause
Legal Update
PFAS: The issue that won’t go away
Legal Update
Oklahoma earthquake: Racial discrimination in adjudication
Legal Update
Vicarious liability for kinship foster carer abuse: Implications for local authority insurers
Legal Update - The Word
The Word, September 2024
Legal Update
Latest short-term insurance trends
Legal Update - The Word
The Word, August 2024
Legal Update
Words matter: Another case on the importance of accurate drafting
Legal Update
London Fire Brigade to stop attending for automatic fire alarms: Implications for insurers
Legal Update
Navigating Oil Price Cap legislation: LMA issues revised Cargo and Hull wordings
Legal Update
It’s not cricket: Insurers change their mind about jurisdiction
Legal Update - The Word
The Word, July 2024
Legal Update
Multi-occupancy building insurance: Latest tribunal decision
Legal Update - The Word
The Word, June 2024
Legal Update - Consumer Duty
Updated UK Consumer Wordings Guidance: Browne Jacobson collaborates with the LMA
Legal Update - Consumer Duty
From products to protection: The rise of embedded insurance
Legal Update
The European Accessibility Act: Inclusive products and services
Legal Update
Final FCA anti-greenwashing rule guidance published
Legal Update - The Word
The Word, May 2024
