FRAEWS and Insurance For Residential Blocks

Since the Grenfell Tower fire in June 2017, which tragically claimed 72 lives, fire safety in high-rise residential buildings has been subject to unprecedented scrutiny and reform. One of the most significant changes to emerge from the post-Grenfell regulatory environment is the introduction of Fire Risk Appraisals of External Walls (FRAEWs). These assessments have fundamentally reshaped how fire risk is understood, presented and insured across multi-occupancy residential buildings.

As a specialist broker working closely with managing agents, FlatGuard, part of Bridge Insurance Brokers Limited, has seen first-hand how FRAEWs have altered the insurance landscape for residential blocks.

A FRAEW represents a step change from the early cladding reports introduced in the immediate aftermath of Grenfell. Rather than focusing solely on identifying materials, a FRAEW is a comprehensive assessment of how every element of a building’s external wall system contributes to overall fire risk.

This includes cladding and insulation types, fire-stopping measures, building height, evacuation strategy and existing fire protection systems. Importantly, the assessment considers the external wall system as a whole and evaluates its fire performance, not just the presence or absence of combustible materials.

For insurers and brokers, this level of detail enables far better risk differentiation. It provides a clearer picture of actual exposure, allowing insurance terms to more accurately reflect the real level of risk.

For managing agents, the introduction of FRAEWs has added complexity to an already challenging environment. There is now a greater responsibility to interpret technical fire safety reports, explain their implications to leaseholders, manage situations where buildings no longer align with insurers’ underwriting appetite, and address cost concerns where premiums have increased significantly.

In the early stages of the cladding crisis, insurer appetite was extremely limited. Brokers were often forced to approach alternative markets, where reduced capacity led to volatile premiums and sudden changes in terms. This placed considerable financial pressure on leaseholders who were already facing the prospect of substantial remediation costs.

As FRAEWs have become more established, the market has begun to stabilise. Brokers like FlatGuard, who remain closely aligned with evolving underwriting criteria, have been able to negotiate more competitive terms. However, for buildings affected by combustibility issues, premiums generally remain higher than pre-Grenfell levels.

One of the most common misconceptions is that achieving a B1 rating following a FRAEW will automatically return insurance premiums to “normal” levels. While a B1 rating confirms that remediation is not required for safe occupation, it does not mean the building is free from combustible materials.

This distinction is critical. A building may be safe for residents to remain in during an incident, but if combustible materials are still present and could contribute to significant property damage, insurers will continue to reflect that exposure in their pricing.

Beyond arranging annual buildings insurance, FlatGuard also supports managing agents with Owner Controlled Insurance Programmes (OCIPs) for remediation projects. These are particularly relevant where works are carried out under Joint Contracts Tribunal (JCT) contracts and can often provide broader and more cost-effective protection than relying on contractor-arranged insurance alone.

Under an OCIP, the RMC or RTM takes out a single policy covering all contractors and subcontractors working on the project. This approach reduces the risk of gaps in cover, delivers consistency in claims handling and can often be negotiated on more favourable terms—especially where a FRAEW or fire engineer’s report clearly defines the remediation scope.

FlatGuard works with specialist underwriters who understand both the regulatory environment and the risks associated with cladded buildings. We advise on programme structure, ensure alignment with JCT contract requirements, and coordinate with project teams to ensure cover matches timelines and site activity.

By retaining direct control of the insurance, managing agents and RMCs benefit from greater transparency, improved cost control and enhanced protection for leaseholders throughout the remediation process.

The launch of the McGill & Partners Reinsurance Facility in April 2024 introduced much-needed capacity into this specialist market. Designed to support insurers covering buildings with combustible cladding, the facility has helped unlock improved terms for many affected properties.

At FlatGuard, we have successfully used this facility to secure premium reductions for a number of clients. These outcomes are driven by accurate risk presentation, strong market relationships and a detailed understanding of which insurers are actively writing this type of risk.

We recognise that higher insurance costs ultimately fall on leaseholders. That’s why FlatGuard was among the first brokers to sign the Government’s Insurance Broker Pledge in October 2023. The pledge caps our commission on buildings affected by the cladding crisis, ensuring that savings achieved through improved terms are passed directly back to residents.

In a market as complex and sensitive as this, the choice of broker is critical. At FlatGuard, we combine technical understanding, regulatory insight and market expertise to help managing agents navigate the challenges of insuring residential blocks.

We don’t just place cover. We challenge assumptions, explain technical findings clearly and work to ensure leaseholders are not paying more than necessary.

If you’re unsure whether your current arrangements are delivering the best possible outcome, or simply want a clearer understanding of your options, FlatGuard is always happy to have a no-obligation conversation.