Committee publication · Correspondence · 13 May 2026

Correspondence from the ABI on the Financial Inclusion Strategy evidence session follow-up, dated 14 April 2026

Summary

The ABI provides follow-up written evidence to the Treasury Committee on its Financial Inclusion Strategy testimony. It addresses motor insurance premium drivers (repair costs, theft, vehicle complexity), multi-occupancy building insurance challenges post-Grenfell (escape-of-water and fire safety risks), ten policy measures to reduce water damage claims, and clarifies that the Financial Inclusion Strategy aims to improve underwriting transparency rather than fundamentally alter risk-based pricing.

Key findings

Motor insurance premiums driven by repair costs (£11.9 billion paid across 2.5 million claims last year), theft (particularly by organised crime gangs), and modern vehicle complexity requiring skilled mechanics; electric vehicles increase replacement costs.
Multi-occupancy building insurance: gross claims paid doubled from £3 billion (2017) to £6.1 billion (2025); fire & explosion claims jumped from £952 million to £1.6 billion; escape-of-water claims from £652 million to £1.3 billion.
Escape-of-water is primary driver of unaffordability in multi-occupancy buildings; claims frequency four times higher than other property types, with 50% recurrence rate after first claim, often masked by late detection and multiple-tenant complexity.
ABI identifies ten measures to reduce escape-of-water risk: mandatory leak detection, regular inspections, enhanced building standards, mandatory pressure testing, improved pipework design, plumber qualifications, wet work permits, consumer education, and smart meter roll-out acceleration.
Financial Inclusion Strategy will improve underwriting transparency and consistency for customers with pre-existing conditions through joint working group with FCA and Money and Mental Health Policy Institute, without changing fundamental risk-based pricing.

Tone

Factual

Topics

insurance-regulationfinancial-inclusionbuilding-safetyconsumer-protection

Key actors

Dame Meg Hillier MP, Hannah Gurga, Association of British Insurers (ABI), Financial Conduct Authority (FCA), Money and Mental Health Policy Institute, Ministry of Housing, Communities and Local Government (MHCLG), Fire Protection Association, Motor Insurance Taskforce

Notable line

“Insurers are paying out an average of £1.8 million in escape-of-water claims daily and we are working with the Ministry of Housing Community and Local Government (MHCLG) and regulators to identify effective interventions to reduce claims.”

Key Quotes

“Last year, insurers paid out £11.9 billion across 2.5 million claims on motor insurance. The principal drivers influencing motor insurance premiums are repair costs, courtesy car and credit hire costs, and theft .”
— Hannah Gurga, Director General, ABI · Motor insurance premium drivers

“Escape of water is a particularly pernicious issue for multi-occupancy buildings, with high-density buildings over eight stories being particularly vulnerable due to multiple and boosted water supplies and material issues.”
— Hannah Gurga, Director General, ABI · Multi-occupancy building insurance risks

“Claims frequency in multi-occupancy buildings are also four times higher than other property types. Once a client has an EoW claim, there is a 50% chance of recurrence, reflecting systemic quality control issues.”
— Hannah Gurga, Director General, ABI · Escape-of-water claim patterns

“The Financial Inclusion Strategy is not intended to change the fundamentals of risk-based pricing, which remain essential to ensuring that insurance is both sustainable and affordable for the wider market.”
— Hannah Gurga, Director General, ABI · Financial Inclusion Strategy scope

“Since the Grenfell tragedy in 2017 to 2025, the annual gross claims paid figure has more than doubled from £3bn to £6.1bn.”
— Hannah Gurga, Director General, ABI · Post-Grenfell property insurance claims trajectory

View original document →

Source · parliament.uk record ↗