With brokers arranging PI insurance for a wide range of professions it’s tricky to keep up-to-date with guidance from all the professional bodies to which their various clients belong. Sarah Brailey, Divisional Director at THB, one of the largest speciality brokers in the London Market, explains two important pieces of guidance recently issued by the Royal Institution of Chartered Surveyors (RICS).
A phrase we hear often now is that we’re living in unprecedented times. In all aspects of our life, at home and at work, we’re having to cope with new challenges and often change fundamentally the way we undertake certain tasks, whether to counteract virus transmission directly, or because of the knock-on economic effects of safeguarding measures. The professional body for surveyors, RICS, has responded to the current situation with two new pieces of guidance.
With the restrictions placed on daily travel many lenders are asking Surveyors to conduct desk-top and drive-by valuations only, in lieu of a physical internal inspection. The valuation report is then based on the information provided with the instruction, combined with desktop resources, and supplemented by local knowledge. In the absence of a physical inspection the assumption is that the property condition is average.
A sensible and pragmatic approach, it might be said, but the consequences could be serious. “Surveyors may have adequate notes, verifiable comparables and a supporting rationale on file” said Sarah Brailey, Director of the UK Professional Risks team at THB, “but in the absence of a physical inspection there will be no formal site notes, and that leaves Surveyors exposed to potential claims down the line.”
RICS has issued instructions to its members that where a “material uncertainty” exists they should include a relevant “disclosure” in their report. You can read the full article here including the RICS press release.
As a result, many professional indemnity insurers would expect to see this wording adopted with immediate effect, and a full explanation where they operate, with exceptions to this rule.
Fire safety exclusions
RICS has also updated its PI insurance requirements with effect from 1st May.
Market conditions have seen changes to the cover available from insurers, including the introduction of Fire Safety Exclusions and cover on an ‘aggregate’ rather than ‘any one claim’ basis. Sarah Brailey explained, “This has resulted in non-compliance with the PI insurance requirements laid out by RICS, meaning Insureds had to get dispensation, and unfortunately this could take some time to obtain. It was an awkward situation for everyone involved.”
In its new updated requirements, RICS will accept ‘any one claim or aggregate plus unlimited round the clock reinstatement’ and has confirmed that ‘Insurers may impose a Fire Safety Exclusion’.
You can view the RICS guidance here.
In both cases, brokers can add value to their client relationships by ensuring their Surveyor clients are aware of these changes and by highlighting the importance of compliance in terms of the validity of their insurance cover. Updating clients in this way reinforces the broker’s role as professional advisor and can go a very long way to ensuring customer retention at renewal. It’s not just social distancing that should prompt us to ‘keep connected’.
Read more about how the UK Professional Risks team at THB helps its partner brokers.