New facility for buildings with cladding issues

13 March 2024

To increase the capacity available for multioccupancy residential leaseholders of buildings with flammable cladding, the ABI has established a reinsurance facility with reinsurance brokers McGill.

As an ABI member, we are pleased to inform you that we have access to this facility in order to provide cover for eligible risks for new and existing customers.

The key points about this arrangement are noted below.


  • 1st April 2024 inception or renewal date onwards
  • Multi-occupancy residential buildings up to £50m total value at risk. Larger buildings up to £150m may be considered by exception on a case-by-case basis
  • Buildings categorised by our Business Resilience Manager as either Category 4 (Combustible) or Category 5 (Highly Combustible) on the RISC Authority scale (part of the Fire Protection Association)
  • Where a building is eligible for government financial support under the Cladding Safety Scheme (CSF), it must be actively pursuing support and must have or be developing a remediation plan. Buildings that are ineligible for CSF are still eligible for terms from AXA and the McGill scheme
  • Buildings written 100% by us. Co-insured business may be considered by exception on a case-by-case basis
  • The building must be predominantly residential occupancy, some commercial parts are acceptable, but it must form less than 50% of the exposure
  • Purpose built student accommodation and aparthotel type business is excluded
  • UK only exposures.

What will happen:

While we’ve stood by existing customers impacted by cladding issues, in many instances it’s been necessary to introduce lower first loss limits to manage our exposure to the heightened level of fire risk.

For eligible business, we will underwrite the risk 100% (up to £50m), with reinsurance support organised by the ABI/McGill facility. For business up to £50m, the first loss limits and the need to buy relatively expensive excess layers above the AXA limit, will disappear. Further, we will not charge more for the additional cover, the charge for the previous lower limit will cover the whole placement. We anticipate the savings on larger eligible exposures to be significant.

For very large business up to £150m total insured value, we will use the ABI/McGill facility to provide the first £50m of capacity. Any capacity we can provide above this level will be subject to us being able to secure additional reinsurance, separate to the facility, and priced based on the cost of this capacity to us.

Similarly, to most other large insurers, we have not been actively quoting new business in this segment over the last few years. However, the reduced net exposure due to the ABI/McGill facility means that we can once again open to new business. Please approach us with new enquiries for buildings meeting the eligibility criteria and we will be pleased to find a solution for you.


For buildings that form part of a portfolio, it will be necessary to ring-fence the impacted building(s) and place them on a separate policy, so they can easily be identified as part of the facility. In many cases this has already been done in recent years. For new business that is part of a portfolio, it is important that you place the whole portfolio with us, rather than only the combustible/highly combustible building(s).


Due to the higher risk reflective premiums associated with combustible/highly combustible buildings, three-years ago with decided to cap the commission payable at 20%. Thank you for your support during this period and it is acknowledged that many of you went further and decided to work net on these buildings.

As part of this change, we will also be reducing our maximum commission for these building to 15%. Our underwriters will ensure that any final gross premium agreed with you is reduced to account for this reduction, so that the saving is passed on to the leaseholders.

Summary and next steps:

We envisage the increased capacity on larger buildings and the option to place new business with us, will improve conditions for leaseholders impacted by these issues considerably. We have internally identified buildings likely to be impacted by these changes, and our underwriters will be in contact in good time prior to renewal to discuss terms with you. Unfortunately, it is not possible to move business to this facility mid-term.

Alternatively, if you would like to be pro-active on renewals, or you would like to discuss new business with us, please reach-out to your usual AXA contact.

None of these changes alter our commitment to reducing the premium paid by leaseholders immediately following building remediation to an agreed acceptable standard.

We look forward to working with you to find improved solutions for our mutual customers.