RICS consults on current UK Professional Indemnity Insurance market
07 February 2022
THE ROYAL Institution of Chartered Surveyors (RICS) is currently seeking views on the Professional Indemnity Insurance (PII) market here in the UK. Last year, the RICS’ Standards and Regulation Board (SRB) launched a review of its PII requirements in the UK.
The aforementioned review has the following focus areas:
*reviewing RICS PII requirements and how the RICS can best support the development of an adequate, appropriate and sustainable PII market for RICS regulated firms
*identifying additional guidance and support that the RICS can provide for RICS regulated firms obtaining adequate and appropriate indemnity
*understanding what information consumers and clients require to ensure transparency around RICS regulated firms’ indemnification arrangements
*reviewing how the RICS collects and uses data to predict emerging trends in the PII market, as well as better assess and articulate the risk profile of the profession as a whole
In December, the SRB received an update on the progress of the review and approved a series of initial recommendations covering several short and medium-term considerations, for which the organisation is now seeking views.
In the short term, a series of actions have been identified that the RICS can undertake which would have a positive impact on the market and provide further support for regulated firms in obtaining adequate and appropriate indemnity. These include:
*improving the types of data collected in order to better understand the claims, premium and broker environment and target regulatory interventions
*ensuring regulated firms have the best possible chance at renewal through working with brokers to standardise market proposal forms and promote positive broker behaviour
*better educating consumers and commercial clients on the benefits of using an RICS regulated firm and the challenges faced with a tough insurance market
*additional support for firms in the area of risk, liability and indemnity
*working with Government and other stakeholders to address and overcome challenges in the market
*amending the Assigned Risks Pool (ARP)
The review has found that, while the current approach towards PII has functioned well since its introduction back in the 1990s, it has recently come under pressure and, as such, there’s now value in considering the fundamental structure of RICS’ PII framework in the UK.
Any changes will need to be assessed carefully in terms of their viability and impact, but structural changes to consider include:
*introducing self-insurance for part of – or the whole of – the profession
*introducing a master policy that’s backed by an insurer or a number of insurers
*maintaining the existing market-based arrangements of having a pool of approved insurers and minimum policy wording that firms must meet, but reforming the scope and quantum of cover through a full review of the minimum policy wording and functioning of the ARP*introducing the option to insure on a project-by-project basis for specific higher risk areas of work, rather than covering all work under a general firm-based policy
The call for views is a crucial part of the RICS’ policy development. The organisation is keen to elicit as many responses as possible, ensuring that feedback is representative of the profession in the UK and that there’s a clear understanding of the potential impact of its proposals.
The RICS is also keen to receive views from other stakeholders, in particular insurers and brokers who will be integral to the success of many of the proposals, and also the consumers of surveying services, among them private consumers and commercial clients such as banks and lenders.*Interested parties who would like to offer their opinions should respond to the call for views by visiting the RICS website