Residents in council-owned leasehold blocks are facing soaring insurance bills, after several companies have left the market uncompetitive.
Westminster Council has told its tenants this year’s insurance bill has doubled from last year, in part because it has been left with no choice but to choose the sole provider.
Last year, the council signed a one-year deal with Protector Insurance to cover all its residential blocks after its previous provider pulled out of the market.
The local authority is now proposing to sign a new five-year contract with the company worth £7.5million after two attempts to tender attracted just one bid.
Leaseholders across councils are facing increased costs, with only one insurance provider left in the capital after giants Zurich and Ocaso both left the market in 2022.
Some local authorities who have not been able to get any insurance cover at all, have been left with no choice but to self-insure, a process that carries a great deal of risk.
Councils are obliged to have appropriate building insurance in place for their residential buildings.
The Council’s previous policy with Avid finished in March 2023, and despite two attempts to tender, in September 2023 and last month, only one bid was received.
A letter to lessees said the ‘significant increase’ in the premium would be reflected in residents’ service charge.
It said: ‘Due to a high risk to both the council and our residents of being self-insured, Westminster has proposed to enter into a 5-year contract to insure with Protector to cover our residential housing stocks.
‘We went out to the market on 4th September 2023 until 30th November 2023, during this time we only received one bid.
‘Given we wanted to try and generate additional interest, we went back out to the market again which closed on 19th February 2024. During this second tender process, we again only received one bid from the existing provider Protector, which is a significant increase in the annual premium.
‘This is consistent with the national and local context, however as we are required to have appropriate cover in place, we are proposing to enter into this contract.’
The letter added that all councils were facing ‘increased costs for the provision of insurance’ and urged the Government to ‘look into our concerns and make changes.’
A spokesperson for the Department of Levelling Up, Housing and Communities said: ‘The Secretary of State wrote to the Financial Conduct Authority (FCA) in January 2022, requesting they review the high buildings insurance premiums facing those in high-rise residential buildings.
‘The FCA’s report in September 2022 revealed there has been an overall rise in building insurance charges amidst a general tightening in the market.
‘We are actively working with industry and regulators to take action.’
Westminster Council did not respond to a request for comment.
Are YOU in a council leasehold building? Get in touch r.prosser@westminstertimes.co.uk