Note to update Members on the latest position regarding coverage for Asbestos claims on their PII policies and which will be regularly updated to advise RICS Members of the latest position.

With the recent enactment of the new HSE regulations regarding Asbestos the whole question of Professional Indemnity Insurance (PII) for Asbestos claims has come to the forefront. The issue has gained even more publicity by proposals from Re-insurers to implement a blanket exclusion on any Asbestos related claim on reinsurance contracts. Such action will have an immediate impact on PII if/when such exclusion is included in policies issued by RICS Members' PI Listed Insurers, which would seek to clarify the existing Pollution Exclusion already included within the minimum PII cover. On July 3 Insurance Press issued a warning that Swiss Re and Munich Re were seeking to impose asbestos exclusions on their public and property liability insurance policies

Several issues are important :

Cover for Asbestos Inspections required under the latest HSE regulations

Discussions have been taking place over a number of months with a major Lloyd's Insurance Broker and certain leading RICS Listed Insurers regarding the provision of a specific scheme for Asbestos Inspectors, as certificated by the RICS and ARCA Certification Scheme currently being developed. The cover will be separately provided to the individual Asbestos Inspector and will not form part of the Inspector's firm's PII policy. The cover will only be available to Certificated Inspectors. Details on the actual cover are not yet available. This proposal will be presented shortly to all RICS Listed
Insurers by the Lloyd's Insurance Broker, as well as other PII insurers, for consideration

Cover for RICS Members already involved in Asbestos related work

The RICS has issued a new minimum policy wording, effective from July. It includes an exclusion for asbestos but RICS has also negotiated a 'buy-back' facility for Members, similar to that for pollution cover currently available, of cover for £250,000 in the aggregate. The new wording is on the RICS website on the Standards page. The wording of the exclusion and ‘buy back’ is as follows:

Asbestos Exclusion

Any claim directly or indirectly resulting from asbestos risks. This exclusion shall not apply where such claim arises as a direct result of a negligent act, negligent error or negligent omission committed or alleged to have been committed by the Insured in the conduct of Professional Business involving ASBESTOS RISKS to the extent the claim is:

for the cost of:

• re-performance of the Insured’s work and /or rectification and/or remediation
• made in respect of any diminution in value of buildings and/or structures (or any part of either or both of them) arising out of a survey and/or valuation by the Insured undertaken in accordance with RICS Practice Statements or standard market procedures relating to survey and valuations

Provided always that:

• no indemnity shall be granted in respect of any damage to property other than that part of the building and/or structure which requires re-performance of the Insured’s work and/or rectification and/or remediation
• no indemnity shall be granted in respect of or arising out of any bodily injury
• The maximum amount payable in the aggregate in the policy period by Insurers in respect of any claims, any claimant’s costs and any defence costs directly or indirectly resulting from asbestos risks shall not exceed the indemnity limit for asbestos risks. The indemnity limit for asbestos risks is not additional to and shall not increase the indemnity limit for claims

Cover for RICS Members undertaking Survey and Valuation work (not specific Asbestos related surveys and/or inspections)

A blanket exclusion would have impacted on all Members and specifically those undertaking surveys and/or valuations on property, as well as Members involved with property investment and/or management. If a defect involved asbestos and a claim was later made it could be excluded under such a blanket exclusion. The new wording as described above provides some minimum cover. Members should also obtain the new asbestos guidance notes for advice on this issue. Any Members with queries on Asbestos and PII cover should contact the Insurance Section on 0207 695 1625 or insurance@rics.org.uk