Miller Insurance Services Limited was delighted to be principal sponsor of the 2004 RICS Conference. Miller is a leading independent insurance and reinsurance broker, specialising in insurance solutions that protect businesses against the complex professional risks they face. The valuation profession continues to be an important focus for us.

In this article, we look at the key issues likely to be faced by the valuation profession over the next year, in relation to your Professional Indemnity (‘PI’) insurance.

International Financial Reporting Standards (IFRS)
The implementation of IFRS will have an impact on a firm’s exposure to PI claims, particularly in view of the potentially increased role played by the valuer in advising a company’s management about strategic property issues and in the preparation of financial statements.  Whilst it is unlikely that PI insurers will raise any immediate concerns, they will be interested in whether the firm is aware of IFRS and is preparing for its implementation.

The PI Market
As we predicted this time last year, surveying and valuation firms have benefited from significantly improved insurance market conditions, resulting in enhanced cover and reduced premiums. The number of insurers willing to underwrite the PI risk of surveyors and valuers remains exceptionally high, when compared with other professions and service providers. This should ensure that premium rates continue to improve for both professions in the immediate future.

The Property Market
The constant speculation regarding property market values will continue to be monitored closely by PI insurers. However, unless there is a significant widespread fall in property prices, we do not expect PI insurers to increase rates in 2005.

The Control of Asbestos at Work Regulations
Specific insurance schemes are being made available for inspectors who operate under these regulations. As a result of such schemes, which offer fairly limited cover specific to the risk, PI insurers seek to limit cover in relation to asbestos. As a result, a firm may be liable to pay for additional services, above and beyond standard asbestos inspections. A specialist PI broker’s expertise can be invaluable in this respect, ensuring that there are no gaps in the cover provided.

Financial Services Authority (FSA) Regulation
On 14th January 2005, the FSA began regulating general insurance business. This has had an impact on both property managers and building surveyors who previously would not have fallen under the scope of insurance regulation.  It has been reported that some firms providing insurance intermediary/mediation services did not apply for FSA authorisation. Buyers of insurance must be careful to use UK firms that are authorised by the FSA to conduct insurance mediation.  The regulations impact upon property managers and building surveyors in particular, in that there will be an ongoing compliance requirement, with severe penalties if the regulations are breached. These penalties are not covered by your PI insurance, but any resultant litigation that may arise could be.

Home Information Packs (HIPs)
The implementation of HIPs is another change likely to impact upon the valuation profession. Whilst the valuation of a property is not new, HIPs are likely to create additional pressures and liabilities. The insurance industry continues to monitor these developments, as they progress, and is working with the RICS to minimise the impact on your PI insurance.

As a final point, good risk management procedures, training and development (and the beneficial effect they can have on a firm’s PI claims) remain the key influences on how insurers perceive a firm’s risk, and consequently on the premiums it charges. All of these factors can have a major effect on the cost of your insurance and you should always work with your broker to highlight any developments that may have a beneficial effect on how insurers view your risk.

The Professional Liabilities team at Miller would be delighted to discuss your insurance requirements. For more information, please contact:

Rupert Alabaster
Director - Professional Risks
rupert.alabaster@miller-insurance.com
+44(0)20 7031 2750

If you would like more information about sponsorship of RICS conferences and seminars, please contact RICS Events on:
+44 (0)20 7695 1600