Model example of how to fight inflated insurance costs
Leaseholders have been given a model example of how to fight excessive insurance costs following a tribunal victory against the Regis Group.
Jeremy Peachey, a chartered surveyor, challenged the £13,000 insurance cost at a 30-flat site in Northampton where the freehold is owned by the Regis Group / Pier Management, the entities of multimillionaire Essex ground rent speculators Nicholas and Peter Gould.
The bill has been cut down by two-thirds to £4,364 – and the tribunal made a section 20C order barring the freeholder from dumping his legal costs on the leaseholders.
Regis Group, which owns 30,000 freeholds, argued that it bought insurance “on a portfolio basis, not by individual property”. The tribunal said that “it is the ability to bulk buy that enables them to earn a commission of 15% on that portfolio as a whole in return for work done”.
Judge JR Morris ruled:
“The terms of the ‘block policy’ were not so advantageous as to justify a premium increase from £3,795.36 to £12,998.40 particularly when one of the virtues of a ‘block policy’ for the tenant is that it is supposed to carry a discount.”
A 15% mark up on insurance is a bit of a bargain given usual practices in residential freeholds.
Gary Murphy, of Allsops, told at conference – unaccountably and disgracefully – organised by the Leasehold Advisory Service that “commissions can be up to 50% of premium, particularly where a significant level of cover is purchased”.
In full here:
The Regis Group tried to head off Mr Peachey’s tribunal action with a “without prejudice” offe beforehand, which inadvertently he just added to the bundle correspondence.
“The tribunal informed the parties that the offer would be disregarded.”
The case has been reported in Private Eye, which reported that insurance broker Lockton had received a commission of under 5%, invited the question: where did the rest of the commission go, and for what?
The Eye reports Dan Harrison, of Pier Management, saying after the hearing:
“We have begun an in-depth review of all our policies and procedures associated with this incident to improve the service we provide our customers and prevent this situation occurring again.”
This prompted the Eye to ask whether the rest of the Regis Group’s 30,000 freeholds could be in line for a refund, too?
Tribunal ruling: RegisGreoupInsuranceRuling