RICS consults on the current UK professional indemnity insurance market


The ROYAL Institution of Chartered Surveyors (RICS) is currently seeking views on the Professional Liability Insurance (PII) market here in the UK. Last year, the RICS Standards and Regulation Board (SRB) launched a review of its UK PII requirements.

The above review covers the following areas:

* examine RICS requirements for PII and how RICS can best support the development of an adequate, appropriate and sustainable PII market for RICS-regulated firms

* identify additional advice and support that RICS can provide to RICS-regulated firms to obtain adequate and appropriate compensation

* understand the information consumers and clients need to ensure transparency of indemnification agreements of RICS-regulated firms

* examine how RICS collects and uses data to predict emerging trends in the PII market, as well as to better assess and articulate the risk profile of the profession as a whole

In December, the SRB received an update on the status of the review and approved an initial set of recommendations covering several short- and medium-term considerations, on which the organization is now seeking feedback.

In the short term, a series of actions that RICS can take have been identified which would have a positive impact on the market and provide additional support for regulated firms to obtain adequate and appropriate compensation. These include:

* improve the types of data collected to better understand the claims, premium and broker environment and to target regulatory interventions

*ensure regulated companies have the best chance of renewal by working with brokers to standardize market proposal forms and promote positive broker behavior

* better educate consumers and commercial clients on the benefits of using a RICS-regulated firm and the challenges faced with a tough insurance market

*additional support to companies in terms of risk, liability and compensation

* work with government and other stakeholders to address and overcome market challenges

*modifying the assigned risk pool (PAR)

Under pressure

The review found that although the current approach to PII has worked well since its introduction in the 1990s, it has recently come under pressure and as such it is now useful to consider the fundamental structure of the RICS PII framework in the UK. .

Any change will need to be carefully assessed in terms of sustainability and impact, but structural changes to consider include:

*implementation of self-insurance for part – or all – of the profession

*the introduction of a main policy backed by an insurer or several insurers

* maintain the existing market-based provisions of having a group of licensed insurers and minimum policy wording that companies must adhere to, but reform the scope and amount of cover through a comprehensive wording review of the minimum policy and the operation of the ARP * introduce the option of insuring on a project-by-project basis for specific high-risk areas of work, rather than covering all work under a general company-based policy

Advice is a crucial part of RICS policy development. The organization is keen to elicit as many responses as possible, ensuring that comments are representative of the profession in the UK and that there is a clear understanding of the potential impact of its proposals.

RICS is also interested in hearing the views of other stakeholders, in particular insurers and brokers who will be integral to the success of many of the proposals, as well as consumers of expert services, including private consumers and commercial customers such as banks and lenders. .

*Interested parties wishing to provide input should respond to the Request for Comments by visit the RICS website


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