Multiple regulatory and legislative changes – from IFRS 17 to GDPR – have recently caught insurance professionals off guard. Now another piece of legislation is two months away from implementation, and barely a fifth of brokers are aware of the implications.
Research from
Munich Re unit HSB Engineering Insurance (HSB) shows that only 18% of insurance brokers in the UK are aware of the imminent effect of the Energy Act 2011 on owners of properties rented out in the private rented sector. The new Minimum Energy Efficiency Standards (MEES) will require investors to meet the MEES grade E on their Energy Performance Certificate (EPC), and failure to comply is never a good thing.
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The specialist engineering and construction insurer, which provides energy efficiency insurance, warned of potential rental income losses for the unprepared. Meanwhile, the number of energy efficiency projects is expected to increase in response to the new regulation.
“The introduction of the energy act will have an impact on the commercial property insurance market,” said Andy Bazley, underwriting manager at HSB. “Lower rated commercial properties will not only become less attractive to future occupants but may suddenly become illegal to rent out without energy-saving upgrades in place to bring them up to the required level.
“With fines of up to £150,000 for non-compliance it is essential that property owners are aware of the new regulations.”
HSB said commercial landlords and property owners could help meet the requirements by investing in energy-saving improvements, which often require funding that is secured against future energy cost savings. The firm’s insurance offering guards against a shortfall in those savings.
“We saw an opportunity for a product which could provide market-leading insurance cover to protect energy efficiency projects; protecting not only the installed assets but the revenues they generate and the savings they produce,” said Bazley.
The new standards are effective on April 01, 2018 for new tenants and on April 01, 2020 for all existing tenancies.
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