Landlords alerted to building insurance swindle

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by Gill Montia

An outspoken insurance broker is warning landlords whose portfolios contain blocks of flats that they may be paying too much for their buildings insurance.

Neil Cook, who is employed as a broker at Ember JD Insurance, is raising concerns about the activities of some brokers and managing agents.

He says he is aware that in some cases hidden commission charges are lining the pockets of both, at the property owner’s expense.

In a recent article in the Observer newspaper, Mr Cook suggested that some landlords are paying up to double the market rate for buildings insurance because brokers are paying “kickbacks” to the property agents who manage their homes.

He alleges that the backhanders are often funded by insurance brokers choosing the insurer that pays the most commission, instead of the company that offers the best value.

Landlords are largely oblivious to their losses because they frequently have no idea which insurance company is covering their properties.

Commonly, management companies send out an annual request for “ground rent service charges and insurance” which do not include finer details such as the commission paid on the buildings insurance.

Speaking to the Observer Mr Cook states: “I see a lot of inflated premiums for blocks of flats where it just doesn’t add up, and there is no way the broker has sought the best deal … sometimes it is as much as double but, typically, the premium is about 30% above what you would expect to pay.”