The Royal Institution of Chartered Surveyors (RICS) is currently seeking views on the Professional Indemnity Insurance (PII) market in the UK.
Last year RICS’ Standards and Regulation Board (SRB) launched a review of its PII requirements in the UK. The review has the following focus areas:
- Reviewing RICS PII requirements and how RICS can best support the development of an adequate, appropriate and sustainable PII market for RICS regulated firms;
- Identifying additional guidance and support that 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; and
- Reviewing how 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.
In December 2021, SRB received an update on the progress of the review and approved a series of initial recommendations, covering a series of short and medium-term considerations, which we are currently seeking views on.
In the short term, a series of actions have been identified that 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 in order to target regulatory interventions;
- Ensuring regulated firms’ have the best 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; and
- Amending the Assigned Risks Pool.
The review has also found that while the current approach to PII has functioned well since introduction in the 1990s, it has recently come under pressure and there is 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, profession through a mutual.
- Introducing a master policy that is backed by an insurer, or 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.
This call for views is a crucial part of our policy development and we are keen to get as many responses as possible and ensure that feedback is representative of the profession in the UK and we have a clear understanding of the impact of our proposals.
We are also keen to get views from other stakeholders, in particular insurers and brokers who will be integral to the success of many of the proposals, and consumers of surveying services, including private consumers and commercial clients, including banks and lenders.
To respond to the call for views, please click here.
Source : RICS