Multi-occupany building insurance

On 29 September 2023, the Financial Conduct Authority (FCA) published their policy statement PS23/14 on Multi-occupancy building insurance - Feedback to CP23/8 final rules.

The effective date of these rules is 31 December 2023

The FCA’s action follows its review of the multi-occupancy buildings insurance market and its aim to ensure better
outcomes for leaseholders and other policy stakeholders.
We have four products that are within scope for changes:  Complete Property Owner, Complete FlatownerProperty Owners Select and Real Estate Select.

Our product development processes and value assessments already take the leaseholders' needs into account, so the statements within our distributor product guides* remain unchanged but we're taking the following action to ensure we deliver good customer outcomes:
The Insurance Conduct of Business Sourcebook rules have been changed to incorporate section 6A.7 “Disclosure requirements for multi-occupancy buildings insurance” and we'll be reviewing and updating our documentation to be able to provide key information about the product and services provided to leaseholders.

We'd encourage you, our brokers, to provide this information for applicable leaseholders under the policy, however where a leaseholder contacts Allianz directly for this information, we'll direct them back to the Intermediary or the policyholder in the first instance. On the second contact from a leaseholder, they will be directed to our leaseholder document request form. This will confirm their identity as a leaseholder and then we'll provide them with the required information.

We'll be producing new documents to reflect the information requirements for leaseholders, which will include:

  • name of insurance undertaking
  • type of insurance
  • main risks insured
  • summary of excluded risks
  • the sums insured
  • excesses
  • term and duration of the policy including the start and end dates of the contract
  • exclusions where claims cannot be made
  • significant features and benefits.

Premium information will include:

  • A breakdown of the premium at:
    (a) (in the case of a flat) building level and (if specified in the policy) the flat: and
    (b) (in the case of a dwelling that is not a flat) at dwelling level.
  • The amount of insurance premium tax.
We've revised our remuneration practices to ensure that the guidance concerning customers’ best interests will be extended to include any policy stakeholders (including leaseholders).

For Property Owners Select and Real Estate Select we'll be:

  • Limiting commission to 30% (including all brokerage work and any work undertaken by parties on behalf of the broker) but up to 35% as a maximum where there is demonstrable added-value for the customer. Customers on these accounts may see their premium reduced accordingly.
  • Removing all forms of low claims rebates.
  • Limiting the use of risk management funds to when evidence of value can be demonstrated for all policy stakeholders resulting in a reduced loss ratio.

For Complete Property Owner and Complete Flatowner we'll be:

  • Limiting commission to 30% as a maximum (including all brokerage work and any work undertaken by parties on behalf of the broker), unless agreed by exception on delegated/specialised arrangements where there is demonstrable added-value for the customer.
  • Any Complete Property Owner and Complete Flatowner accounts that currently have a standard commission above 30% will automatically be reduced for new business and renewals from 31 December 2023. Customers on these accounts may see their premium reduced accordingly.
These changes will equally apply to existing cases within Long Term Agreements (LTAs).

For Delegated Authorities (DAs), Allianz expects those Brokers in possession of the third party information to provide this disclosure to leaseholders. Remuneration changes may also be applicable and the Allianz DA owner will shortly be engaging with each DA partner with a notice of amendment to confirm how this affects them. Irrespective of the DA agreement renewal date, these changes will be implemented for each and every policy under DAs from the point that they incept or renew from 31 December 2023 (in accordance with the deadline set by the FCA).

The Allianz Terms of Business Agreements (TOBAs) will be updated accordingly.
We'll be reviewing the assessment of fair value and will provide a further update shortly.

If you have any questions, please speak to your usual Allianz contact.

Thank you. 

*Our distributor product guides summarise the design, target market, intended value and distribution strategy of our individual products, all in one document. As communicated in September, these have been updated to include the outcomes of our 2023 value assessments, in line with the FCA PROD 4 requirements. Please ensure you review our distributor product guides for all Allianz products you distribute to your customers.
This promotional material is intended for insurance broker use only and no-one else should rely upon it.
It must not be made available to anyone other than the intended recipient, either in its original form or any reproduction.