27 MAR 2019
We are making changes to the requirements around Professional Indemnity Insurance (PII) run-off in the UK. These changes will ensure that RICS regulated firms have better access to run-off cover and provide further protection to consumers.
RICS requires that registered firms carry "adequate and appropriate" PII cover from a RICS-listed insurer, and that they carry run-off when they are deregistering and ceasing to trade. This is required to be on a claims-made basis i.e. fully retroactive covering all work done by the firm. It is the responsibility of firms to procure this run-off, but this can be difficult as cover isn't always available or affordable.
Following several consultations, we are clarifying "adequate and appropriate" to mean a minimum of six years for consumer claims. Under the new policy, insurers will provide a £1,000,000 aggregate limit for consumer claims, included automatically in the minimum wording. No premium payment will be required to trigger this. Firms can obtain run-off for longer periods than six years, or with higher cover levels, if they deem that "adequate and appropriate".
Firms will still be required to take out "adequate and appropriate" cover for commercial claims, which we would normally expect to cover six years after closure.
As well as consumer claims now being automatically covered by a six-year run-off clause with a £1,000,000 aggregate limit, the Assigned Risks Pool (ARP) will be opened to include a Run-Off Pool. This will allow firms that cannot reasonably procure run-off for commercial claims on the open market and additional option to gain cover.
RICS will be timing these changes to go live on 1 April 2019.
Please direct queries to firstname.lastname@example.org.