The Cladding Insurance Rollercoaster: Are Premiums Finally Coming Down?

If you have opened a service charge statement over the past few years and felt your stomach drop at the insurance line item, you are certainly not alone.

For leaseholders living in blocks affected by cladding or external wall safety issues, buildings insurance stopped being a routine annual expense and turned into an outright financial crisis. But with the industry-backed Fire Safety Reinsurance Facility now well underway, what has actually changed on the ground — and are you finally seeing relief in your annual charges?

How We Got into This Mess: The “Policy Lasagna”

Before 2018, insuring a block of flats was straightforward: one major insurer looked at the building, priced the policy, and covered the entire property.

After the Grenfell tragedy, that market completely broke down. Insurers suddenly refused to take on the risk of an entire £50 million multi-storey block with combustible cladding.

To get buildings covered at all, brokers were forced into what the industry calls layered policies — stacking five, six, or even seven different insurers together. Each company took on a tiny sliver of the risk (say, 15%), but charged high rates to do so. On top of that, stacking multiple underwriters added heavy broker commissions and fees.

The result? Average annual insurance costs for cladding-affected flats skyrocketed from a few hundred pounds to well over £3,000 per flat by 2023.

What the Reinsurance Facility Actually Does

Launched to tackle this exact capacity gridlock, the Fire Safety Reinsurance Facility acts as a practical safety net. It does three essential things:

• Takes the Extreme Risk Off the Table: Backed by global reinsurer Swiss Re, the facility absorbs catastrophic “tail risk” losses, giving mainstream insurers the confidence to underwrite higher-risk buildings again.
• Kills the Stacking: Instead of assembling a messy jigsaw of six different underwriters, a single participating insurer (like Aviva, Allianz, or Zurich) can now cover 100% of the building’s value.
• Caps Commissions: Participating brokers and insurers have capped their commissions, ensuring the savings directly lower service charge bills rather than disappearing into administrative fees.

The Cost Breakdown: Where Do We Stand?

The average annual buildings insurance cost apportioned per flat in London — a standard compliant flat against a cladding-affected one — shows a clear shift:

The Good News and the Reality Check

The good news is that the facility has succeeded in taking the heat out of the market. Premiums on affected blocks have fallen roughly 30% from their peak, and the terrifying risk of a building becoming entirely “uninsurable” has been practically eliminated.

The reality check? Paying £2,150 a year just for buildings insurance is still a massive burden — more than three times what a resident in a compliant building pays.

Insurance mechanisms like this are designed to stop the bleeding while remediation takes place. The only permanent route back to standard, £700-a-year baseline pricing is getting the scaffolding up and the dangerous materials off the walls.

We work closely with resident directors, leaseholders, and proactive brokers to ensure our managed buildings access eligible reinsurance schemes, challenge inflated commissions, and push remediation projects across the finish line.