Changes To Insurance Backed Guarantees – 10 Years Better Than 20 Years? (October 2014)
October 13, 2014
The insurance backed guarantee industry (for Damp Control, Timber Treatments & Wall Tie Installations) is undergoing an important change, the reason is not due to poor claims history, failure of member companies or the solvency of the providers, it is because of the effects of the“credit crunch” in 2009.
Our government and the FSA (Financial Services Authority) is determined that this does not happen again, but if it does, then for those who bought insurance they are protected, this is called “solvency 2”, in brief, long term commitments such as insurance backed guarantees must possess absolute financial protection for the duration of cover.
This means that cover over 10 years will become very expensive, and as such insurance companies will no longer provide protection for over 10 years duration.
Is 10 years better than 20 years? Well from research undertaken claims on guarantee’s occur in the first 6 – 18 months of remedial work having been completed (occasionally problems do arise, as with all companies, but our approach is to remedy any issue without delay, and only involve the insurance company, if deemed necessary).
Currently we have a 100% claim free history over a 6 year period with the CGS (Construction Guarantee Services) from whom we obtain our insurance for our customers.
Premiums for 10 year insurance backed guarantees will also be cheaper than for 20 year insurance backed guarantees, all savings will be passed on to our customers.
All our guarantees are now standardised at 10 years maximum duration, this also brings our industry in to line with the same insurance offered on new build dwellings, for example by the NHBC (National House Building Council).
In conclusion these new changes by regulation are aimed at making the UK insurance industry more resilient, accountable, clear and meaningful.