Five UK insurance broking groups have pledged to cap insurance premiums and stop sharing commissions with landlords, a move that will reduce costs for leaseholders in high-rise buildings with fire safety issues.
The groups - Willis Towers Watson, Lockton, Brown & Brown (NYSE:BRO), Bridge, and PIB - will no longer share commissions with third parties on buildings over 11 metres in height with known fire-safety problems.
Under the new cap, the insurers have also agreed to limit the premiums they take to 15%.
Following the Grenfell Tower disaster, costs of insuring flats in high-rise blocks have soared with many owners effectively trapped as their properties became impossible to sell.
UK regulator the Financial Conduct Authority (FCA) had previously described intermediary fees, which can reach as high as 62% of premiums, as "disproportionate".
A London tribunal found that residents of one block of flats were overcharged by £1.6 million in commission payments.
In response, the government pledged to ban commissions for managing agents, landlords and freeholders on building insurance, a move expected to be part of a leasehold reform bill.
The bill will also end leaseholds on new-build houses, cap existing ground rents, extend lease terms, and grant leaseholders the "right to manage" their property.
Lee Rowley, Minister for Building Safety, said: “I strongly welcome the decision of these brokers to step up and demonstrate their willingness to do more on bringing premiums down.”