Multi-Occupancy Building Insurance Regulation
The information on this page is for UK insurance brokers or intermediaries
What is the Multi-Occupancy Building Insurance (MOBI) Regulation?
On 29 September 2023, the Financial Conduct Authority (FCA) released its Multi-Occupancy Building Insurance Policy Statement PS23/14. The paper outlined the requirements insurers and insurance intermediaries need to put in place relating to multi-occupancy building insurance products. This will ensure we provide good outcomes for residential leaseholders who ultimately bear the cost of the insurance.
A key requirement is increased transparency for leaseholders and the introduction of new policy disclosure requirements.
The FCA have also made clear that they expect firms to ensure commission based on percentage rates are consistent with providing fair value to leaseholders. Intermediaries should not earn more in absolute amounts, unless there is a corresponding increase in benefits provided to leaseholders.
What action is required for intermediaries?
Where you have any policies in scope of the new MOBI regulations, you will need to ensure you are meeting the Multi-Occupancy Building Insurance requirements by 31 December 2023. You will need to complete the following:
Broker action - Disclosure requirements
1
Provide the required disclosure information to the customer as soon as possible. Do this after conclusion of the contract, and upon any subsequent renewal*.
2
Tell the customer to pass a copy of this information on promptly, and in full, to any residential leaseholder of the building. However, this only needs to be provided if the MOBI contract provides cover.
3
Where a leaseholder contacts you with a query, we expect a resolution within a reasonable timescale**. If a leaseholder contacts RSA direct for support, we will refer to you before responding.
*The table further down this page provides additional information relating to the scope and expectations of the new rules. This includes where RSA provide required information for the new disclosures to pass onto policyholders and leaseholders.
**If you do not have all the information you require from us, please let us know. We can then support the request by providing the information we are responsible for.
Broker action - Remuneration
1
Notify RSA of any payments made to third parties on MOBI products in view of the new MOBI expectations.
2
Where there are significant increases in premium, ensure that any commission and other remuneration remains in line with the levels of service and benefit you provide.
3
In January 2024, we'll be sending you an email containing our Product Governance attestation. This will include the new MOBI requirements. You'll need to complete and return it to us at prodgovdistribution@uk.rsagroup.com.
Our approach to Product Governance and Remuneration
In RSA’s role as product manufacturer, we have considered interests of policy stakeholders within our latest product governance reviews. Our Target Market Statements will not change as a result of these requirements.
We will be strengthening our reviews going forward, which may result in additional requests for information in the future. To ensure we meet the latest guidance for policy stakeholders, we will review our current commissions structures. We are also strengthening our approach for material increases in net premiums on in-scope products.
This may require further evidence from you to support percentage-based commissions to confirm commissions remain fair.
What if I have a delegated arrangement with RSA?
Where you have a delegated arrangement with us, we will be in contact separately to discuss the requirements.
New disclosure requirements - scope of changes
A multi-occupancy building is a building that contains 2 or more units for occupancy. This can be residential, commercial, institutional, industrial uses, or a combination.
The following clarifies the type of leaseholder in scope of the new disclosure requirements:
- Residential leaseholders only, and those that pay a 'service charge' as part of the leasehold agreement, which includes the cost of buildings insurance
- Sub-tenants, or those on assured short-hold tenancies (ASTs) are not leaseholders under the FCA's rules. As a result, buildings used as shared houses or houses of multiple-occupancy are out of scope. The FCA's focus is on self-contained 'mortgeagable' dwellings
Our approach to multi-occupancy disclosure requirements
We already provide you with all the disclosure information we are responsible for producing as the insurer and product manufacturer across the products in scope.
Where we are the follow manufacturer, it is the broker or lead insurer's responsibility to provide this information.
To help you, the table below summarises where you can find the required information for our products where we are responsible for providing the information:
Information required | Where can I find this information? |
|---|---|
Summary of cover | |
| Name of the insurance undertaking | Policy Wording or Summary |
| Regulatory status | Policy Wording or Summary |
| Type of insurance | Policy Wording or Summary |
| Main risks insured | Policy Wording or Summary |
| Summary of excluded risks | Policy Wording or Summary |
Total policy sum insured, together with;
| Policy Schedule |
| Any excess payable in the event of a claim | Policy Wording or Schedule |
| The term duration of the policy | Policy Schedule |
| The policy start and end dates | Policy Schedule |
| Exclusions where claims cannot be made | Policy Wording or Schedule |
| Significant features and benefits | Policy Wording or Summary |
Pricing information | |
| Total premium for the policy and include: A breakdown of the premium at:
| Policy Schedule* |
| The amount of insurance premium tax payable | Policy Schedule |
| Where applicable, the amount of any value added tax | Not applicable |
*Where the policy is in scope of MOBI and the insurance premium is not already broken down at a building level, please contact us for a premium breakdown. Alternatively, for policies insuring multiple similar buildings, you could calculate an estimated breakdown. This could be through allocating a proportion of the buildings premium (or total premium if not broken down to buildings premium) in line with the proportion of sum insured for the individual property, relative to total property sum insured on the policy, such as: Divide the Individual building sum insured value by the overall policy sum insured value and multiply by the overall policy premium.
Get in touch
If you have any concerns regarding the new regulations, please contact your existing RSA contact or email us.