Buildings with unsafe cladding or other external defects carry insurance premium rates 56% higher than those where defects are absent. A new government survey of more than 2,000 properties in remediation programmes confirms this directly. The research covers England and Wales and links unresolved fire safety defects to elevated insurance costs.
The Remediation Programme Insurance Survey was published by the Ministry of Housing, Communities and Local Government (MHCLG). It found an average premium rate of 0.14% for buildings where flammable cladding or external defects remained present. For buildings where defects were not reported or had been removed, the average rate stood at 0.09%.
The survey covered 2,029 filtered responses across five programmes. These were the Cladding Safety Scheme (CSS), Building Safety Fund, Responsible Actors Scheme, social housing schemes, and the Welsh Building Safety Fund. Data was collated and analysed by the Government Actuary's Department on behalf of MHCLG.
The average total premium across the sample was £20,000 per building over the last renewal period, against an average sum insured of £15 million. The overall average premium rate was 0.11%.
Around 3,200 residential units, approximately 3% of the sample, faced annual premiums above £1,800. Some buildings reported fire or water excesses of at least £1 million, though the correlation between flammable cladding and higher excesses was inconclusive.
The report's most pointed finding concerns post-remediation pricing in the multi-occupancy residential sector. The report notes that premiums in many cases do not fall once identified defects are removed. MHCLG said it will continue to monitor whether premiums adjust after defects are removed.
Most buildings in the sample reported premium rates at or below 0.15%, but 5% exceeded 0.3%. The survey also found wide variability in excess levels, with some buildings below £1,000 for fire and water claims and others above £1 million.
The MHCLG data adds to a body of evidence tracing the insurance market's structural difficulties back to the Grenfell Tower fire of 2017. A 2022 Financial Conduct Authority (FCA) investigation found that average insurance prices for high-rise buildings had risen by 125% in the years following the tragedy. That rise was driven primarily by buildings with flammable cladding or material fire safety risks.
Before Grenfell, fewer than 20 insurers provided cover for mid and high-rise residential buildings. Providers subsequently reduced their exposure or withdrew from the sector. The contracted market has since carried limited competitive pressure on pricing.
The FCA introduced rules from December 2023 requiring insurance firms to treat residential leaseholders as customers, demonstrate fair value, and disclose pricing and commission information. Despite those reforms, the MHCLG survey indicates the underlying premium gap tied to building safety risk persists.
MHCLG said it will publish updated findings as further information becomes available. The government is working with the insurance industry on options for possible support, as set out in the Remediation Acceleration Plan of December 2024.
