25 SEP 2019
This is an update to our July 17 article on the challenging Professional Indemnity Insurance (PII) market that firms are facing.
This hardening of the market is in part due to a review by Lloyds, which raised concerns over insurers' exposure to PII. RICS is monitoring this situation closely and is proactively engaging with relevant stakeholders to ensure continued provision of a viable PII market for the profession.
Please ensure that you contact your broker well in advance of your PII renewal date to ensure that there is time to undertake a full market exercise. If you are unable to get cover, please contact RICS at the earliest opportunity.
We are particularly conscious of PII availability for Approved Inspectors, who work to certify buildings under the Building Act 1984, where coverage in the market has become very limited. This is due to insurer concerns over exposure to cladding claims, and related fire safety notifications.
The Ministry of Housing, Communities and Local Government (MHCLG) has set specific requirements around PII for Approved Inspectors. Due to these specific requirements, and MHCLG unwillingness to react to the hardening insurance market, Approved Inspectors are increasingly unable to find compliant cover, removing their ability to trade. This has implications for the continuation of thousands of construction projects around the UK as well as national housing targets, and has been reported in the national press.
Earlier this year RICS took action to amend its policy wording in order to ensure adequate and appropriate cover is available in the market for those professionals.
We are also working with key professional bodies and stakeholders to respond to these challenges. In early September, a roundtable was convened to discuss the difficulty in professionals with fire safety exposure in getting PII. There was agreement among attendees that the current market restriction in supply of PII leaves consumers at risk. The group committed to working together to influence MHCLG and insurers to ensure adequate cover to the market and consumer.
RICS will continue to monitor the impact of our policy wording change and developments in the PII market. We are committed to working alongside MHCLG, stakeholders and insurers to find a sustainable route forward.