Posted on 01 Feb 2018
Two months to Energy Efficiency Act: Are you ready?
Only 18% of UK insurance brokers are aware of the effect the Energy Act will have when it comes into force in April 2018
London, 1st February 2018: There are now only two months until the new Minimum Energy Efficiency Standards (MEES) deadline arrives. Specialist engineering and construction insurer HSB Engineering Insurance (HSB), part of Munich Re, warns that commercial property owners who are not prepared could lose significant amounts of rental income as non-compliant properties become increasingly difficult to rent out.
Investors must meet the MEES grade E on their Energy Performance Certificate (EPC), by the deadline of 1st April 2018. This new regulation applies to residential and commercial properties rented out in the private rented sector and will come into effect on 1st April 2018 for new tenants and for all existing tenancies by 1st April 2020.
Research from HSB highlights a lack of awareness in the insurance market* with only 18% of UK insurance brokers surveyed aware of the effect the Energy Act 2011 will have on property owners when it comes into force in April 2018.
Andy Bazley, Underwriting Manager at HSB commented: “The introduction of the energy act will have an impact on the commercial property insurance market. 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.”
Commercial landlords and property owners could help meet the requirements by investing in energy saving improvements; such as retrofitting LED lighting, more efficient boilers, improved building management systems, voltage optimisation, and insulation. These energy saving projects often require funding that is secured against future energy cost savings. HSB’s Energy Efficiency Insurance product can offer protection against a shortfall in those savings giving property owners and lenders a guarantee that savings will be achieved even if the initiatives fail to meet the initial projections.
Andy Bazley continued: “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.”
With the energy efficiency standards deadline fast approaching, an increase in the number of energy efficiency projects is anticipated as investors and developers realise the impact of the minimum standards on rental income.
*Survey conducted between November and December 2017. 250 UK insurance brokers were interviewed
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About Munich Re
Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability and client proximity. Munich Re creates value for clients, shareholders and staff alike. In the financial year 2010, the Group – which pursues an integrated business model consisting of insurance and reinsurance – achieved a profit of €2.4bn on premium income of around €46bn. It operates in all lines of insurance, with around 47,000 employees throughout the world. With premium income of around €24bn from reinsurance alone, it is one of the world’s leading reinsurers. Especially when clients require solutions for complex risks, Munich Re is a much sought-after risk carrier. Our primary insurance operations are concentrated mainly in the ERGO Insurance Group. With premium income of over €20bn, ERGO is one of the largest insurance groups in Europe and Germany. It is the market leader in Europe in health and legal protection insurance. More than 40 million clients in over 30 countries place their trust in the services and security it provides. In international healthcare business, Munich Re pools its insurance and reinsurance operations, as well as related services, under the Munich Health brand. Munich Re’s global investments amounting to €193bn are managed by MEAG, which also makes its competence available to private and institutional investors outside the Group.
HSB Engineering Insurance is a leading specialist provider of engineering insurance and inspection services. HSB Engineering Insurance helps clients reduce risk through a range of innovative engineering insurance products tailored specifically for the construction, renewable energy, and manufacturing industries, as well as for the general retail, commercial and public sectors. HSB Engineering Insurance is the UK-based arm of Hartford Steam Boiler, one of the world’s leading equipment breakdown insurers. A.M. Best Company awarded the HSB Group of companies its highest financial rating, A++ (Superior). HSB was acquired by Munich Re in April 2009.
London, England, 01 February 2018
HSB Engineering Insurance Limited
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