Are YOU aware the Guarantee system is changing in 2015
This is mainly due to issues which occurred during the financial collapse which occurred in 2009 commonly termed the ‘Credit crunch’ which left a number of banks, lenders and insurance companies in serious trouble, with many having to be bailed out by the public money and we are still feeling the aftermath of the in 2015.
So what are the changes and how are they likely to affect you the customer?
The government, via the Financial Services Authority, have enforced changes on the insurance companies and the financial institutions in the form of a system named ‘Solvency 2’
The 20 or 30 year insurance backed cover will no longer exist, or at least will not be worth anything not even the paper it’s written.
Solvency 2 basically enforces the insurance companies through The Financial Conduct Authority’ FCA , who underwrite the insurance to ensure they have to hold the cash in the bank to cover the risk over the full period of insurance, conforming to the requirements and maintaining the twenty year cover would be very expensive for the insurance company’s as they would need to tie up vast amounts of capital to cover the risks, these costs would inevitably end up being passed on to you the customer which would make the insurance cover too expensive to be affordable.
This has resulted in the insurance companies having to change their insurance cover, they are reducing the cover on damp proofing, wall ties and fungal decay remedial works to ten years from 2015. (Remaining cover will still be honored over the original period of the policy).
Is this reduction in time, affecting the custom, in my opinion no it is simply falling into line with the NHBC warranty, insurance cover and cover on waterproofing projects. It will also benefit the customer because insured guarantees issued through credible insurance companies like GPI can only be applied for through qualified remedial companies registered with recognised trade associations such as the Property Care Association PCA who are recommended by RICS , which gives you the customer much more protection and ensures your remedial works have been undertaken by qualified and reputable remedial companies.
‘Insurance Backed Guarantee’ v ‘Insured Guarantees’
Firstly you need to understand the difference and the information below will hopefully make this clearer.
‘Insurance Backed Guarantee’
These are general issued by unregistered/ unqualified contractors and manufacturers, usually backed by one calamity insurance or other such bond, limiting cover at best to the supply of ‘replacement materials/ product insurance’ if these are found to be faulty leaving the customer with no direct contract or route to the insurer in the event of a claim and indeed, historically allowing whoever has and still do run such schemes to rake off the profits as much as they see fit, with no controls over money held in the bank to cover the insurance in the event of a claim, or the system simply being dissolved with little or no restrictions, leaving the customer with no cover.
This type of guarantee is available through registered members of the Property Care Association PCA through the GPI you are arranging cover which is backed through the ‘The Financial Conduct Authority’ FCA ‘Insured Guarantees’, is the wording which manufacturers and calamity insurance schemes are not allowed to use as the insurance they provide cannot meet the required standard, Olympic Construction are a full qualified and registered PCA members and are able to offer our customers ‘Insured Guarantees’ so which type of insurance cover would you prefer?