What insurance work can my AB Block Property Manager do?
Our property managers collectively manage circa 3000 individual units, so this question is asked frequently. Leaks into the flat below or from the flat above are a very common headache for many residents. The level of involvement your property manager should have is more complex than you might think. It is largely determined by regulation and Client instruction.
AB property managers insurance work can be separated into 2 scenarios:
1. WE DO IT – We handle claims / queries where we have Client instruction to place / arrange the insurance cover
2. WE PASS IT ON – We put leaseholders / residents in touch with the relevant insurer / broker / Client to handle their claim / query directly if AB does not arrange the insurance
Scenario 1 is the more complex. Generally, your AB property manager can administer building and other insurance in so far as instructed and permitted by law; they act as an ancillary insurance intermediary with day to day responsibility, assisting with claims and arranging the cover via insurance brokers. But this is not true of all managing agents as there are limitations and specific requirements.
AB are not authorised by the Financial Conduct Authority (FCA). Instead we are permitted to carry out insurance distribution activity work which is regulated by the Royal Institution of Chartered Surveyors (RICS). Our registration can be found via this link www.fca.org.uk/register reference number RICS 785568.
AB is an Authorised Professional Firm defined by RICS as a professional firm authorised by the FCA under Part IV of The Financial Services and Markets Act 2000 (FSMA), able to carry out Ancillary Insurance Intermediary works. Since AB are not a credit institution nor investment firm, and insurance distribution is not our main professional activity we can, for remuneration, take up or pursue insurance distribution on an ancillary basis providing the insurance product is complementary to a good or service e.g. building insurance compliments managing a building, our main professional activity!
AB is registered as an Exempt Professional Firm with the FCA defined by RICS as a person to whom, under s327 of The Financial Services and Markets Act 2000 (FSMA) the general prohibition imposed by section 19 of FSMA does not apply. Section 19 states no person may carry on a regulated activity in the UK, or purport to do so, unless they are is (a) an authorised person; or (b) an exempt person.
Section 327 of the FSMA states generally that exemption from the general prohibition set down in Section 19 does not apply to the carrying on of a regulated activity by a person that is a member of a profession; or controlled or managed by one or more such members, and that person must inform their client of any pecuniary reward or other advantage gained. If AB receive commission for arranging insurance cover from a broker, we typically advise our Clients when arranging the original policy, at renewals and / or on the annual budget. It is also clearly set out in our terms of business.
AB Estate & Block Management are members of RICS profession and registered with FCA. This is where other agents can fall down, and some are not necessarily aware of the complexity of just arranging a quote for an insurance claim.
Insurance claims fall outside our typical day to day management services and is chargeable work at hourly rates + vat. However, as part of the AB Loyalty ethos we usually waive these additional fees for Scenario 1 Clients, and where they have previously agreed we can retain any related commission. We find that this provides certainty for our Clients on budgeted expenditure for the service charge year. Some claims can run for several months and the hourly counter keeps going round and round. As part of our AB Loyalty ethos, we like to give a little back. And in this instance we give back our time.
For that extra peace of mind, RICS undertook an audit of our insurance dealings in 2019 – our terms of business, practices and training are compliant. As ever this blog is a very general informal comment on a complex regulated area that is not our main professional activity. Should you have any queries your property manager is always available to assist.
