FENZ levy changes: What you need to know

As brokers and clients prepare for these changes, it presents an opportunity to review whether current insurance arrangements continue to align with a client’s needs, objectives and rebuilding intentions.

For many clients, full replacement value cover remains suitable. However, some property owners may not intend to rebuild their property to the same size or specification following a total loss.

As these conversations arise, our Specified Replacement Value (SRV) cover may provide an alternative worth considering.

Available under our Material Damage and Business Interruption policy, SRV cover offers replacement value conditions up to an agreed SRV limit, subject to policy terms, conditions and limits. This may assist brokers in providing a flexible solution for clients whose circumstances may differ from a traditional full replacement approach.

Key features:

- No average clause applies (subject to policy terms)

- Treated as replacement value cover up to the agreed SRV limit

- Premiums are scaled according to the SRV limit

- A lower sum insured may also result in lower FENZ levy costs from 1 July 2026 (subject to policy terms)

The fine print:

*If a claim to reinstate the property exceeds the SRV sum insured selected, we reserve the right to discharge our liability by cash settlement. Our rating is scaled up depending on the proportion the SRV represents of the full replacement value (e.g. half the sum insured does not mean we charge only half the premium).

Questions worth exploring with clients:

As the FENZ levy changes approach as of 1 July 2026, it may be worthwhile discussing:

1. Whether the current sum insured reflects the client’s rebuilding intentions following a total loss

2. How the new levy calculations may affect the overall cost of insurance

3. Whether the selected basis of settlement remains appropriate for their circumstances

4. Alternative insurance solutions that may better align with their needs

Why consider SRV cover

A practical alternative

- Provides another option where full replacement cover may not align with a client's circumstances or budget.

Capacity flexibility

- Can assist where full replacement insurance capacity is unavailable or difficult to secure.

Aligned with rebuilding intentions

- Considered for clients who may not intend to rebuild their property to the same size or scale following a total loss.