How City Heights Won the Battle of Insurance Commissions
By admin | February 19th, 2010 | Category: Past Articles | 39 commentsWe’ve been provided with the following information by residents of City Heights in Nottingham, on how they went about winning the battle of Insurance Commissions / Kickbacks in their LVT Case.
We trust that those of you considering LVT action, will take note of this essential information in your LVT battle with Peverel / Solitaire.
Cue the alarm bells ringing in Peverel Towers….
You must get from Oval Insurance Brokers the full policy document, summary of facts, certificates and claim history for your block. Also get the revaluation documents relevant to your block from Zurich, via Oval revalue all Peverel’s 500+ estates.
Don’t take any excuses from Oval, they are legally required to give you this info. Threaten them with the FSA if required.
Then contact an Independent Insurance broker and have your block quoted for Buildings Insurance, requesting specifically NO COMMISSIONS except obviously the broker, as that is reasonable but speak frankly with the broker about the size of his/her commission.
Ask for these quotes in writing and then submit these as evidence in your LVT.
Enquire as to whether the Broker would be willing to attend the LVT to give evidence in person, most will if they think they are going to get the business after all is said and done. (You need a good fishing rod with a carrot on the end)
You must then ensure the quotes you get match the exact valuations and the terms and cover of the existing Oval Policies or they are worthless!!!!!. It should all come together with a bit of work.
Take a witness statement from the Insurance broker too, producing his actual quotes as an exhibit – again, this is very important.
You will find that either prior to, or at the start of your LVT Peverel OM will approach you offering to split the commissions they have received with your residents. They appear to do this in all cases where Applicants get expert Insurance witnesses.
They will offer you everything over 20%. Peverel receive 33.05% Commissions on all their policies. This has been the case from 2006 to present. Upto 2006 the rate was 26.4%. In the Respondents bundle Peverel will produce a list of tasks which they state they perform to justify their 33.05% commission kickbacks.
WHAT YOU MUST DO
Is get your Insurance Witness to go through this list of tasks and comment, in his expert opinion which ones he would expect an Insurance Broker to do, not a Landlord.
Point out to the LVT that Oval are suppose to be the broker and therefore the role is being unneccessarily duplicated. This is the the only way to attack. You should argue that when the commission was 33.05% it should be reduced to say 10% and when it was 26.4% you will accept 3.35%.
Peverel’s Barristers use good case law on Insurance commission issues to try and prove the policies are within a scale of reasonableness and the current law is, the policy inforce does not have to be the cheapest.
This is true but you can fight with specific caselaw which will save your bacon…….
First, the case of ‘Havenbridge Limited v Boston Dyers Limited 1994 WL 1060898′.
There is one section in there which is appropriate to the financial arrangement Peverel OM has with Oval and Zurich……’
*Roskill J…..’The safeguard for the tenant is that, if the rate [Insurance Premium] appears to be high in comparision with other rates that are available in the insurance market at the time, then the landlord can be called upon to prove that there was no special feature of the transaction which took it outside the normal course of business’.
READ THIS OUT DURING THE LVT and argue that Peverel’s commission / kickbacks from taking out this policy are clearly, for anyone to see, a special Feature in the transaction as Judge Roskill eluded too, and therefore the onus is on Peverel to prove the commissions were not a special feature. They will try and play down the special feature by again telling the Tribunal what extra work they actually do (from that list of tasks mentioned earlier they do to try and justify a commission) so attack them again with your expert insurance witnesses statement.
Also mention the second paragraph in the case of Williams V. Southwark London Borough Council (2001) 33 H.L.R. 22……
Lightman J…….’As a general rule, a lease will not be construed so as to enable a landlord to make profit from service charges; the purpose of a service charge is to enable the landlord to recover from lessees the increased costs of services supplied’.
REMEMBER
The Insurance quotes you get must match exactly the cover Peverel OM have or it will be totally discounted in evidence. Also make sure your insurance witness makes reference to the claims history when he gives your quotes or again they are rubbish.
One last thing…. are you being charged a 3.25% direct debit fee on top of the insurance premiums? It was held in the City Heights LVT this was unlawful!
Feel free to contact us, if you wish for contact details of City Heights, who are more than willing to help others.
This is excellent advice.
We’re currently finalising our RTM and have already put in place a new property manager and buildings insurance.
We have a committee meeting this Monday evening where I will bring this up, as I suspect we are also one of the ‘Fortune 500′. I will recommend to the committee that we should pursue a LVT also, despite going the RTM route. The beauty being that if we’re succuessful, Soliatire won’t be able to simply ‘credit our account’ as they will no longer be our property manager; they will have to release actual funds as per the RTM guidelines.
Imagaine if every development in the ‘Fortune 500′ did this?
We currently pay over £12k in Insurance for a block of 12 Flats (YES that’s over £1,000 per Flat for the Buildings Insurance alone! Can any one beat that?) I have been battling with Solitaire for years on this issue, even provided them with an alternative quote from AXA at around a quarter of the current cost – this was ignored! And yes we’re part of the Solitaire > Oval > Zurich scheme!!
Solitaire have justified the premium by saying the Claims History on the Block has pushed the premium up. Indeed there have been a few claims mainly resulting from flooding incidents but I sincerely do not believe that this in any way justifies the ludicrous premium we pay!
I have asked Solitaire a number of times to provide a clear Claims History that their quotes are based on so that I could obtain a true like for like quote but they have never provided this. Probably because they know “The Insurance quotes you get must match exactly the cover Peverel OM have or it will be totally discounted in evidence.”
I would be grateful for any more pointers from City Heights as I have in the past been reluctant to pursue LVT as I generally found from published rulings that they were more lenient towards the Landlords / Freeholder rather than the Leaseholders and also any rulings in favour of the Leaseholders did little to resolve problems going forwards and any compensation awarded was minimal. City Heights have done INCREDIBLY WELL to have got their result and in the face of such legal opposition from highly paid ‘professionals’! I take my hat off to you all at City Heights – WELL DONE!!!
Obviously the way to go in the long term is RTM but what about all historic ripping off that we’ve suffered!?
Nirmal – I’m currently taking legal advice on just this question, but I believe it IS possible to pursue both RTM proceedings and at the same time apply for LVT on the historic accounts. Essentially, having our cake and earing eat. Which is what Solitaire have been doing for years,
If it is possible, the elegance of this solution will be that Solitaire will have to release ACTUAL MONEY rather than ‘credit your account’, as following RTM there will no longer be an account.
I’ll post again once I’ve got more info pursuing both RTM and LVT.
Who did city heights use as the company to provide the exact policy?
Also, who did they use as their Barristers? If you are reading this Peverel – Virginia Quay is coming to get you.
Isn’t one of the major points of the “City Heights” decision that the residents themselves presented their case to the LVT tribunal…??? Specifically two of them, neither with any legal training…??? So presumably, they had no barrister/s…???
Unlike Peverel, who sent their crack legal team, but still lost…!!!
Just wondering – in an LVT tribunal, does the party that loses have to pay costs incurred by the other party, or do both parties pay their own costs, whatever the outcome…???
To Paul Dawson (and the rest of Virginia Quay) – go get ‘em…!!! I look forward to reading about your (hopefully) successful LVT outcome on this website as well in due course, along with the amount Peverel are ordered to “credit” to your accounts….. Seems there’s the small matter of the £56k over-spend (still not explained…) on the non-working bollards, for starters…..
Costs:
The issues of costs in an LVT is a little one sided to the benefit of the Landlord. Notionally no costs can be awarded but recent legislation made it possible for either side to be reimbursed for the LVT costs which is at a max of £500. The Landlord may have the power, through the lease, to levy their legal costs through your service charge. It may well be that your lease prohibits this. However when you make your service charge application (27A) you can make an application that none of the landlords costs can be considered as relevant charges – this is called a 20C application. For the tribunal to grant this application you have to show that either you have made reasonable attempts to resolve the issue before making the application and/or that you have acted properly. If the landlord has acted frivolously or disregarded directions of the tribunal then the 20C will be more easily granted. When you make the 20 C application make sure that you make the application in the name of all the leaseholders and not just in the name of the applicants – so that the landlord cant simply levy their charges against non applicants.
With regard to COSTS and all other aspects of procedures for LVTs I recommend the booklet “APPLICATION TO THE LEASEHOLD VALUATION TRIBUNAL” available from The Leasehold Advisory Service –
http://www.lease-advice.org – can be viewed on-line and/or downloaded.
This is really helpful. Thx so much. Congratulations to Admin for bringing us all together. The visit stats (5526 in 38 days) show that the site has touched a raw nerve. Certainly for me right now it’s compulsory viewing.
Over the last week at least three or four respondents, including me, appear to be in the process of organising RTMs on Peverel/Solitaire/County managed buildings. Some are going for LVT instead or in addition. We are at various stages and someone on the PeverelAction site has nearly finished. Rather than each of us re-inventing the wheel wouldn’t it be of assistance if there was, in addition, a closed forum where we could discuss mutual problems without disturbing the alarm bells in Peverel Towers
Greg Press and Neil Healey are heroes. This is what MBE’s are for.
Charles yes indeed MBE’s but lets not forget our “Admin” for creating this site.
Great Oaks from little Acorns grow!
Just gone through our historic insurance policies – we are indeed one of the ‘Fortune 500′ sites with Zurich policies placed by Oval, subject to the same arrangements exposed by the City Heights LVT. I feel a letter coming on.
Even though we are Peverel OM / OM Property Management rather than Solitaire, and the nominated insurance broker is Kingsborough rather than Oval … I have found out today that not only is our policy with Zurich (alarm bells already ringing), but also that Oval are the people to contact regarding a claim ! What is going on here, are Oval and any other insurance broker associated with Peverel properties all implicated in the same scandal ?
It makes me wonder if it is all Peverel sites involved in this type of backslapping arrangement, which means 50,000 properties under management could be affected rather than just the “Fortune 500″.
No wonder Peverel have gone silent when asked for full financial and commercial details of the policy, and specifically whether there is a premium rebate arrangement in excess of 15% in place between the insurer or broker and any part of the Peverel Group.
Just in case, we submitted a Tribunal application this week.
Charles Johnson – yep, the waters just continue to get murkier & murkier, don’t they…..
And bear in mind that the “Fortune 500″ refers to the number of developments, so the number of individual properties involved will be many thousands. I’m sure my development is one of the 500, and there’s 44 individual flats here….. So at that rate, that’s 22,000 properties…..
One other thing that I’ve not seen commented on, re. the insurance scam: I thought Zurich were one of the major players in the insurance game, and a well-respected brand. My opinion of them has gone downhill quicker than an olympic skier in the past few weeks, and I’ll not be considering them for any future personal insurance I take out. How can they (Zurich) continue to be involved in such a widespread rip-off – they must know what PevCo / Oval etc. are up to, surely…??? But then Zurich are getting huge amounts of money in (with repeat business year after year), so why should they worry…??? Business is business, and money talks. That would be OUR money, of course.
They (PevCo) do seem to have gone rather quiet re. insurance. As I’ve commented on another thread, I sent “Andy” an email on Monday evening, regarding the insurance for my development. He has welcomed alternative quotes from us, after all….. He sent the “Read Receipt” back at 9am on Tuesday morning, but has yet to provide me with an actual reply to the email, which I specifically asked for on Monday evening. He’s posted comments on this website in the past couple of days, so we know he’s in the office (or at least online).
So, “Andy”, I’ll ask again – where’s the reply to my email to you of 4 days ago…???
Hi Guys at City Heights
Contacted Oval and recieved all the documentation except the rebuid valuation, reply as below
“We have spoken to the insurers, who have advised the obligation of insuring the correct sum insured lies with the freeholder.”
Any help would be appreciated
Jon Dyson,
On receiving our annual accounts in December I wrote to the Estate Manager requesting a copy of the surveyors revaluation which took place during the year, a copy of the insurance policy, and details of all claims in the last five years. It took a while but all this was provided direct from Luton.
Interesting from Peverel today. They state the Kingsborough-Oval-Zurich deal on my block has a 20% premium rebate for “work on behalf of Zurich” rather than the 33% at City Heights, plus another 3-4% rebate for Oval’s claim handling work.
If true it begs the question why is the Zurich premium £3,500ish, when we had a rule-of-thumb quote that it should be about £1,700? Do all Zurich policies cost nearly twice the market rate, or is someone fibbing here !!!
No Charles, not all Zurich policies cost nearly twice the market rate.
The one for my development is around THREE times the amount of a quote I’ve obtained. I’ve forwarded this on to Peverel for consideration, and I await a response (they have at least acknowledged receipt)…..
Ah the Peverel/OM/Solitaire story is ever continuing … I had noticed my insurance was through Kingsborough -> Zurich when checking through my extortionate service charge end of year summary. I brought this to the attention of the PM and his manager. They clearly told me face to face that neither Kingsborough or PeverelOM (as they were then known) gained anything from brokering the insurance and that competitive quotes were looked at every year.
Thanks to this info I find that my gut feeling was right, and that I was indeed being lied to (in person I might add!).
I have instigated the first steps outlined here in this post (contact OM/Kingsborough) for the relevant docs. Thanks to everyone here for the great work.
Bushbrother,
Welcome to our Brave New World!
It used to be “lies,damn lies and statistics”; it’s now “lies, damn lies, statistics…..and Peverel”
Making some calls to Oval makes the situation sound worse … Oval broker the quote from Zurich, but the request was from Kingsborough, who got the request from PeverelOM! So who knows how many different \overheads\ were added!
This is brilliant – well done to them!.
Does anyone know of any reasons why they can get away with charging £15 per year to run a DD? Who is best to complain to?
Cheers
Nigel
So Peverel have just confirmed to me that Oval are getting just over 23% in comission, they are saying it is justified (but nothing more than that). What are my next steps? I see in the info above the judge ruled 10% was fair? is my only option LVT?
Bushbrother,
Of course Peverel will state that the 23% commission is justified. They have charged your development and would ahve to defend their actions at an LVT were it to come to that.
So the question you are asking is: ” Why do LVT’s come to different conclusions to the Management companies over what a “reasonable” commission on insurance should be ?
I believe the answer lies in the fact that the “expertise” on an LVT panel (ususally of 3 members) lies with the presence of a RICS surveyor on the panel. RICS recently published a report (early Feb – can be read online on their website) in which they criticise commissions currently being charged by insurance brokers, agents and freeholders. They can hardly say one thing based on their investigations and in their report and another when sitting on a panel at an LVT.
With regard to what you should do next – alas this is your decision and yours (and your fellow leaseholders) alone. When I employ a solicitor to act on my behalf I pay her £160 an hour; however she never “advises” me because – as with all solicitors, she acts upon the instructions I give her.
The information and “advice” given on this site comes courtesy of the admins who pay for this site’s operation and those visitors who offer their knowledge and information gratis.
Bushbrother,
That is interesting Oval confirmed to me their percentage was 3.45%?
Bushbrother,
Are you quite sure of your names here? Evidence at LVTs is that Kingsborough (fully owned by CBG) received 23.05% in 2009 of which 3.45% is passed to Oval, supposedly independent but we’re not sure what to really believe with this company, for its role in insurance claims. The City Heights and other LVTs have rolled back Kingsborough commission to 15%, the industry norm.
Returning to the matter of legal costs.
I have just re-read Carl’s AGM minutes (from the link on the right) and in them DE Heady points out that your home contents insurance provides for up to £50,000 legal costs per claim . I have checked my own policy and it does offer this, though with obvious restructions.
I also have access to a free legal helpline through my bank account.
Neil, sorry, you are quite right, it is Kingsborough who get the big dosh
Archangel – Interesting point about home insurance, I will take a look @ mine.
All,
Some further advice, I have the relevant insurance documents from the relevant parties, I am a bit stuck with who to contact to get a competitive quote, I have tried contacting Admin about it but have heard nothing (I am sure he/she is very busy!), has anyone got a broker/company to recommend for performing a like to like comparison? Perhaps someone from City Heights could tell me what company they used?
Thanks!
Bushbrother
We used Lansdown in Cheltenham, very helpful and also sent me a like for like quote as we intend to follow the same route as city Heights.
The individual was a Mr Tim Davies, quote came in at £1100 including £200 for Directors legal cover, Oval was £3400!
The like for like quote came in at £700 – £800 across the board, astonishing.
If you are stuck for other brokers try the link to landlordzone there are lots on there.Good luck
@ Jon Dyson – Thanks so much, very useful info!
Jon Dyson,
On behalf of ‘Andy’ I really must protest at your post. When you write that the like for like insurance quote is £800 compared with £3,400 please realise that some of us might be led to think that Peverel is boosting its profits. This is a wicked thought.
PS I might try Lansdown too!
Peverel boosting it’s profits…??? What a ridiculous suggestion. For even thinking such a thing, you should have your service charge doubled. And an admin charge of £50 (+ VAT) added, for good measure.
Next you’ll be suggesting that they regularly ignore emails, fail to carry out simple maintenance jobs despite months of chasing, and change their name every few months to try and fool the world into thinking they are nothing to do with the previously-identified shambles of a company…..
So another question … If I am looking to fight my service charges and insurance scam, what is the best route?
Peverel are now part of Ombudsman – Property which is free and “impartial”, I have reached the point where I can use this service. Or do I go LVT which means I have to appear in a court scenario, and pay the fee.
Do I go Ombudsman and reject if I don’t agree with outcome and then use LVT? Thoughts?
Anyone at City Heights
Just about ready to tackle Solitaire on the insurance.
Would you suggest I approach them directly or go straight to the LVT?
Bushbrother,
I would have thought if you use the Ombudsman you would be asked to sign an agreement at the outset that you will abide by the ruling. Even if you are not asked, IMHO you should abide by it.
Morning, I am sure that City View, another recent loss to Solitaire had the same problems with the insurance charges.
In my opinion the charge is probably based on a percentage of the overal service charge for the year, thus easier for Peverel/CBG to forecast profits.
Anyone thinking about going though the LVT route needs to gather information from other won LVT’s and use all of the same arguments. TTAS website has a few of these.
@Nigel – we’re being charged £15 for DD.
Have you challenged this yourself?
@Colin – I have queried this one numerous times. In my opinion a charge “could” be applied on the initial DD setup, as Peverel can correctly argue that there is some admin on their side to perform (although every other company seems to be able to do this for free).
My issue is really around why this fee is repeated each year, when nothing has changed except the value to be debited. Peverel have told me that due to this change in amount they need to do more admin. I have pointed out to them that the whole point of DD is that the value can change, and hence why my mobile provider changes its amount every month depending on my usage!
I was simply told that that was the way it is and it would not change, also there was no law to stop them. They did however inform me that you can phone up the accounting dept and change the DD to a 6 monthly cycle, this will then waive the fee as you are then matching the cycle times in the lease.
Basically its a licence to print money, as nobody likes large sums leaving accounts, much better to have small monthly debits. I wonder what the profit is on the 200,000 odd flats? I guess maybe 80% of them would opt for DD?