Insurance question (not sales related)

[Groat]

I'm looking at a Zurich insurance certificate.

One section of it states a "property sum insured" figure.

Is that the same as 'reinstatement value" , or could the reinstatement value be something different?

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

So I phoned a good local broker who said yes, property sum insured and reinstatement value are the same thing.

Can anyone confirm this?

[Insurancejon]

Groat said:

I'm looking at a Zurich insurance certificate.

One section of it states a "property sum insured" figure.

Is that the same as 'reinstatement value" , or could the reinstatement value be something different?

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

So I phoned a good local broker who said yes, property sum insured and reinstatement value are the same thing.

Can anyone confirm this?

Long time no speak squire.

Yes that's correct. there may be 2 figures though. the one without brackets it the figure you have declared as the sum insured, which should be the the full building rebuild including demolition.

If there is a figure in brackets, that will be the uplifted amount the policy gives you due to inflation/increased building costs through the year.

Its, your responsibility to make sure the un bracketed figure is correct at policy inception/renewal. Any increases during the year are ok as long as they are within the uplift.

i.e you declare £100k rebuild at inception, but the policy shows £125k in brackets (25% uplift)

NB - word to the wise, rebuild figures are currently going through the roof

[Groat]

So just so we're clear, property sum insured = reinstatement value. Ok.

Reinstatement values, assessed periodically, always rise. However the one in this policy FELL by 25% between Y2020 and Y2021.

Obviously the building didn't shrink, and the build cost didn't reduce (quite. the opposite), so.....how could it FALL?

Edited by Groat on Wednesday 4th May 14:47

[Insurancejon]

property sum insured = reinstatement value.

correct

it could have been fat fingers at the brokers or at Zurich, or an algorithm gone wrong

[Groat]

Insurancejon said:

property sum insured = reinstatement value.

correct

it could have been fat fingers at the brokers or at Zurich, or an algorithm gone wrong

Sadly, it's a bit more complicated than that.

[TwigtheWonderkid]

Groat said:

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

Typical of Towergate, avoid any actual work if at all possible. fking useless bunch of wastrels. Get back on to Towergate, tell them you're the policyholder, they are the broker, and whoever arranged the policy isn't relevant and they are your advisor. If they won't agree, get the policy transferred elsewhere.

What if your house burns down tonight. Tomorrow morning, do you really want to be trying to resolve who you need to talk to? You need to sort this out now, not when a claim has occurred.

[Groat]

TwigtheWonderkid said:

Groat said:

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

Typical of Towergate, avoid any actual work if at all possible. fking useless bunch of wastrels. Get back on to Towergate, tell them you're the policyholder, they are the broker, and whoever arranged the policy isn't relevant and they are your advisor. If they won't agree, get the policy transferred elsewhere.

What if your house burns down tonight. Tomorrow morning, do you really want to be trying to resolve who you need to talk to? You need to sort this out now, not when a claim has occurred.

This is a co-proprietors policy supplied by a thing called a factor. The factor is an "introducer". They pass the business to Towergate who act as "the broker". They in turn choose "the underwriter" who in this case is Zurich.

The problems start and the abuse begins when the "introducer" is given control of organising the reinstatement value.



The factor welds 20-25% on to the premium as a 'cut'. The higher the premium, the larger the sum the 20-25% becomes. The higher the reinstatement value the higher the premium. It is therefore in the factor's financial interest for the premium to be as high as possible which requires the reinstatement value to be as high as possible.

The building mentioned above had a sum insured of £2.54M in April 2020.

My privately commissioned reinstatement valuation by a local CS produced a figure of £1.25M.

These factors arrange many many many of these over-egged reinstatement value policies.

The amount of money the generate for factors is enormous.

The more the matter is investigated the murkier it becomes.

Edited by Groat on Wednesday 4th May 17:28

[TwigtheWonderkid]

Groat said:

TwigtheWonderkid said:

Groat said:

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

Typical of Towergate, avoid any actual work if at all possible. fking useless bunch of wastrels. Get back on to Towergate, tell them you're the policyholder, they are the broker, and whoever arranged the policy isn't relevant and they are your advisor. If they won't agree, get the policy transferred elsewhere.

What if your house burns down tonight. Tomorrow morning, do you really want to be trying to resolve who you need to talk to? You need to sort this out now, not when a claim has occurred.

This is a co-proprietors policy supplied by a thing called a factor. The factor is an "introducer". They pass the business to Towergate who act as "the broker". They in turn choose "the underwriter" who in this case is Zurich.

The problems start and the abuse begins when the "introducer" is given control of organising the reinstatement value.

That's all fine, but now the deal is done, you are the customer, and Towergate are YOUR broker. They work for you, not Zurich, and not the introducer. You are the customer, they are your agent. It's a master and servant relationship, and they need to be reminded of that.

But these mega brokers, Willis, Towergate, Marsh et al are all the same, fking arrogant s. IMHO.

[Insurancejon]

TwigtheWonderkid said:

Groat said:

TwigtheWonderkid said:

Groat said:

I asked Zurich. They won't speak to me and referred me to the broker Towergate, who also won't speak to me, and referred me to the factor/building manager who arranged the policy who also won't speak to me because they don't like me.

Typical of Towergate, avoid any actual work if at all possible. fking useless bunch of wastrels. Get back on to Towergate, tell them you're the policyholder, they are the broker, and whoever arranged the policy isn't relevant and they are your advisor. If they won't agree, get the policy transferred elsewhere.

What if your house burns down tonight. Tomorrow morning, do you really want to be trying to resolve who you need to talk to? You need to sort this out now, not when a claim has occurred.

This is a co-proprietors policy supplied by a thing called a factor. The factor is an "introducer". They pass the business to Towergate who act as "the broker". They in turn choose "the underwriter" who in this case is Zurich.

The problems start and the abuse begins when the "introducer" is given control of organising the reinstatement value.

That's all fine, but now the deal is done, you are the customer, and Towergate are YOUR broker. They work for you, not Zurich, and not the introducer. You are the customer, they are your agent. It's a master and servant relationship, and they need to be reminded of that.

But these mega brokers, Willis, Towergate, Marsh et al are all the same, fking arrogant s. IMHO.

Knowing a bit about Groats business, and how factors work in Scotland.....hes got a tough fight on his hands.

Essentially, a factor is a property m management co, but legally slightly different in Scotland.They get to do pretty much what they want in arranging the block of flats insurance....its up to Groat to challenge it, which is easier said than done....however he is a tenacious chap, and I'm sure he will be victorious at some point.

The good news is, this practice is now verboten (or just about to be) south of the border, so I guess it will be happening soon in Scotland too

what is happening to Groat is the management co/factor are legally in charge of the insurance and upkeep of the freehold. They arrange it, and get a kick back from the broker. I guess the commission on the policy is 50% of the premium split 50/50 between Towergate and the management co.

[Groat]

Insurancejon said:

what is happening to Groat is the management co/factor are legally in charge of the insurance and upkeep of the freehold. They arrange it, and get a kick back from the broker. I guess the commission on the policy is 50% of the premium split 50/50 between Towergate and the management co.

Not quite. They don't share ANY commission with the broker. They take the premium and add 25% to it and take that. So the "beauty" of the scheme from the broker's perspective is that they DON'T have to share commission with the introducer/factor.

The policies themselves are objectionable. Weak policies with poor terms at an expensive price with not so much as a nod to the clients' best interests and fully focussed on the income stream it provides for themselves (the factors).

That's pretty rubbishy, but it's probably legal (at the moment). What I'm not sure is legal is the provision of hugely over-inflated reinstatement values, the only motive for which is the consequent inflation of premium and therefore of the 25% add-on which the factors take for themselves (without adding any identifiable value).

Obviously the underwriters are oblivious to it. They're passed a risk to assess and no-one's blaming them for not closely scrutinising the reinstatement values they presumably take on trust.

Less sure about the brokers. Okay, they're not rocket scientists, but they are (presumably) experienced and they are locally based. Shouldn't they be much more au fait with local reinstatement values, and shouldn't eyewateringly high ones raise an eyebrow or two?

But get the scale of the scam. Some of these factors manage the insurance of tens of thousands of dwellings, so at a guess there are a six figure number of individual dwellings whose buildings' reinstatement values have been at least doubled and sometimes more. Every year. The scam is easily into the tens of millions per annum, and all bypassing the attention of underwriters, presumably the compliance officials in brokerages, and of course the many many many end users who never read the contents of the certificate, the accompanying paperwork, and wouldn't know how to determine the scam even if they did.

An MSP has been asked to have a look at it and he will hopefully be in contact over the next few weeks. I can't see this ending well for the factors, who are presumably going to have to repay the excessive part of premiums paid because of negligent assessment of the reinstatement values.

Hopefully further than that, and fraud police will be brought in. And to give you the idea of just one of these s' scams, they were charging premiums of over NINE HUNDRED pounds a year for a 45 sqm 1 bed flat in a block of 8 the same in Glasgow's east end. It ended with them getting sacked as managers, and the HA who took over their role now charge +/- £100pa for the BI which is quite a difference for an ordinary person or small family in these hard times.

It's a fairly clever scam and possibly hard to prove as criminal, but it's very cruel as well, and the sooner it's stopped the better.

Edited by Groat on Thursday 5th May 00:50