It's a tough time for UK residential property. The insurance market is hardening, and the Building Safety Act is expected to prompt a fresh wave of defect claims. At times like these, having a captive to support your insurance programme can mean the difference between being insured or being left out in the cold.
For the past five to six years, rates within the UK residential property sector have hardened substantially, prompted by a series of claims and safety concerns.
It has become increasingly difficult to secure affordable building insurance with full value coverage or even meaningful limits. Underwriters have tightened terms and conditions considerably, with the introduction of cladding exclusions. Between 2016 and 2021, property freeholders and their tenants suffered rate hikes of 187% on multi-residency buildings with cladding exposures.
Against this backdrop, property owners and their tenants using a captive to support their insurance programme are benefitting from continuity of cover. By increasing their captive retentions where necessary to reflect the changing insurance market, there's much more opportunity to maintain levels of protection and help to stabilise rates. Those without the ability to retain risk through a captive are faced with the prospect of substantial rating increases, reduced cover and limited market choices as carriers retrench capacity for certain risks, in particular those with cladding and/or structural defect exposures.
Explore our whitepaper to learn more about the long-term benefits that self-insurance offers UK residential property landlords and their tenants in this challenging market.