Understanding Fire Risk Appraisals of External Walls (FRAEW) and their impact on insurance for residential blocks

What Is a FRAEW?

A FRAEW goes beyond the early cladding reports adopted post Grenfell. It is a comprehensive assessment that examines how each element of an external wall system contributes to a building’s overall fire risk. This includes the type of cladding and insulation, fire-stopping measures, the building’s height, evacuation strategy and fire protection systems. Rather than simply identifying materials, FRAEWs evaluate the fire performance of the system as a whole.

For insurers and brokers, this more detailed approach allows for better risk differentiation. The result is a clearer picture of real exposure, allowing insurance terms to better reflect the actual level of threat.

Implications for Managing Agents 

For managing agents, this shift introduces new complexity. You’re now expected to interpret and explain technical fire safety reports to leaseholders, deal with the possibility that the building no longer aligned with the insurers underwriting appetite and manage cost expectations - especially where premiums have risen sharply.

Early in the cladding crisis, insurance providers had limited appetite for these risks. Brokers had little option but to approach alternative markets where a lack of capacity resulted in volatile premiums, sometimes with little or no warning signs. This created major financial pressure for leaseholders already facing possible remediation bills.

However, as FRAEWs have become more common, the market has begun to stabilise. Brokers like FlatGuard, which stays up to date with evolving underwriting criteria, have been able to negotiate more competitive terms, though premiums generally remain above pre-Grenfell levels for buildings impacted by combustibility issues.

Common misunderstandings: the B1 rating

A common misunderstanding is that a B1 rating following a FRAEW will automatically bring premiums back to normal. While a B1 rating confirms that remediation is not required for safe occupation, it does not mean the building is free of combustible materials.

That distinction is critical. A building may be safe for residents to stay during an incident, but if materials could still cause serious property damage, underwriters will factor that into premiums.

Support with Owner Controlled Insurance Programmes (OCIPs)

In addition to arranging annual building cover, FlatGuard also supports managing agents with Owner Controlled Insurance Programmes (OCIPs) for remediation projects. These are particularly relevant when remediation works are required under the terms of a Joint Contracts Tribunal (JCT) contract and can often provide broader and more cost-effective protection than relying solely on contractor-provided insurance.

With an OCIP, the RMC or RTM takes out the insurance policy directly, covering all contractors and subcontractors working on site. This centralised approach helps to avoid potential gaps in cover, ensures consistency in claims handling, and can often be negotiated on more favourable terms - especially where a FRAEW or fire engineer’s report clearly outlines the remediation scope.

FlatGuard works with specialist underwriters which understand the risks and regulatory environment surrounding cladded buildings. We provide advice on how to structure the programme, ensure compliance with your specific JCT contract terms, and liaise with the project team to align timelines and coverage appropriately.

By controlling the insurance directly, managing agents and RMCs gain greater transparency, tighter cost control, and enhanced protection for leaseholders during the critical remediation phase.

New capacity and market progress

The launch of the McGill & Partners Reinsurance Facility in April 2024 has added vital capacity to this specialist market. Created to support insurers covering buildings with combustible cladding, the facility has helped secure improved terms for many properties.

At FlatGuard, we’ve used this facility to reduce premiums for numerous clients. These savings are the result of accurate risk presentation, strong market insight and knowing which insurers are actively writing this type of risk.

Our commitment to leaseholders

We know it’s leaseholders who ultimately bear the cost of higher premiums. That’s why FlatGuard was among the first brokers to sign the Government’s Insurance Broker Pledge in October 2023. This pledge caps our commission on buildings affected by the cladding crisis, ensuring that any cost savings go directly back to residents rather than being absorbed by intermediaries.

Why the right broker matters

In a market this complex and sensitive, choosing a broker which understands the technical, regulatory and market dynamics is essential. At FlatGuard, we work closely with managing agents and use our insurance expertise to navigate the complexities of covering residential blocks. We don’t just source cover - we challenge assumptions, explain technical findings and make sure your leaseholders aren’t overpaying.

If you're uncertain whether your current broker is delivering the best results or just want to better understand your options, we’re happy to have a no-obligation conversation.

This article was written by the FlatGuard team.