New changes to insurance guarantees for remedial repair
October 1st, 2014
As a professional Property Care Association Approved Company we are able to offer our clients insured guarantees for all of our specialist work. This ensures that if our company were to regrettably cease trading your guarantee would continue to provide protection for the work undertaken by ourselves.
For decades our industry has been at the forefront of consumer protection and the provision of long term guarantees and insurance backed guarantees, together with the creation of Guarantee Protection Insurance Limited (GPI) is a lasting testament to this.
Despite the visible confidence we have in our products, fundamental changes in the way insurance companies are regulated are about to change things for us and our customers and there is little that can be done to change what is set out below.
Basically the rules that must be observed by insurers are set and enforced by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA). These rules are changing. “Solvency 1” which sets out the liquidity rules for the insurance industry will be superseded by “Solvency 2”. One very important element of this new regulation relates to capital reserves. In short, the longer the policy term, the greater the capital reserve the insurance company is required to retain. The knock on effect of this is that insurance companies can no longer derive value from very “long tail” insurance and may struggle to retain sufficient liquidity to meet their obligations under Solvency 2. As a direct result of this regulatory reform we have been put on notice that 20 year insurance backed guarantees (IBG) will no longer be available and It is anticipated that the maximum term available for an insurance backed guarantee will be reduced to 10 years.
It must be stressed that the loss of the 20 year IBG is not the result of a poor claims history or the failure of companies like ourselves but by central regulation, aimed at making the UK insurance industry more resilient, accountable, clear and meaningful.
As such from the 31 December 2014, we regret due to the above changes in legislation we will no longer be able to offer 20 year insurance policies for the work undertaken by ourselves, and all official insurance policies will be reduced to 10 Years cover.
Note Insurance guarantees can only be provided by professional and vetted companies who have proven financial stability, an extensive level of technical and practical expertise, strictly adhere to industry codes of practice and are compliant to relevant Health and Safety legislation.
Insurance guarantees offer protection for a small one-off fee which is subject to (IPT) Insurance Premium Tax showing that you are buying official insurance. Beware, If you are not paying IPT then it’s not insurance. Unlike other guarantees available Insurance guarantees are specific to the property and do not need to be reassigned to subsequent owners in order to remain valid.
When comparing GPI / PCA members with other contractors you must ask yourself who vets those contractors, who determines their technical skills, are they Health and Safety trained and are they good enough to be acceptable by an insurance company?
To read more about our insured guarantees read here Guarantees
