Surveyors: Updates to RICS PII Minimum Policy Wording
07 October 2021
In April 2021, RICS announced changes to its Minimum Policy Wording and insurance rules for professional indemnity insurance (PII) with the aim of providing greater fire safety cover for chartered surveyors.
Under the new rules, RICS listed insurers are not permitted, without specific dispensation, to exclude fire safety claims on a property of four storeys or less and fire safety coverage must be provided as a minimum on an aggregate, defence cost inclusive basis. The RICS Minimum Policy Wording also now includes new exclusionary language in respect of Cyber related claims and losses.
The improved fire safety cover is a positive shift that has benefited many RICS member firms. But there are still many other firms that have not been able to get the improved cover due to their activities and insurers concerns over the fire safety exposure in certain areas of their work. In such cases, specific dispensation has to be obtained from RICS regulation which your broker should be able to assist you with.
“Silent cyber” is an issue that has been receiving attention in the PII insurance market since the beginning of the year. The term refers to the scenario where cyber cover is neither explicitly excluded nor clearly included in the policy wording and this can result in ambiguous cover and an increased risk of disputes. The Prudential Regulation Authority and Lloyd’s made insurers put into action plans to reduce ‘silent’ exposures - by either excluding them, or providing affirmative cover. Unfortunately, the PII market has generally looked to exclude cover and the RICS Minimum Policy Wording has been amended to introduce new exclusions relating to Cyber Acts, Computer Viruses, Infrastructure and fines and penalties relating to data breaches. Given the introduction of these Cyber related exclusions within your PII policy, we would advise you to discuss this with your broker and consider any additional provision you may need to put in place in respect to Cyber related risk.
PII Market Update
The tough market conditions faced by the surveying and valuation profession renewing their professional indemnity insurance should have come as no surprise to regular readers of our newsletters. At Howden, we have been reporting on the hard market for the past two years. We were careful to forewarn our clients to expect the hard market would continue until at least the end of 2021 and, as predicted, most firms are continuing to see premium increases on both their primary and excess layer PII policies.
The hard market continues to impact a wide spread of professional services firms with increased premiums putting unwelcome financial pressure on businesses at a time when most are also dealing with the practical, professional and financial consequences of the pandemic.
Insurers’ appetite for new business remains limited and the number of RICS listed insurers available to underwrite secured-lending valuation work remains even more so. Positively, history tells us that insurance market conditions are cyclical. Because of this, we believe the market will eventually stabilise, with the potential for a downward movement of rates when capacity and appetite improve, and as the uncertainty of the pandemic starts to ease.
Until then, it is important that firms remain well-informed regarding the PII market so they have a clear idea of what to expect at their next renewal. As part of our role as a specialist broker, we endeavour to keep our clients updated with relevant information and advice that may impact them, particularly when it comes to the management of risk and PII. Ahead of your next PII renewal and to assist you in navigating through some of the more recent challenges, we would urge you to consider the following:
- When are you expecting to hear from your broker?
- Is that enough time? If not, get in touch with your broker to agree appropriate timescales?
- Are you aware of the potential challenges that exist for your specific risk exposure?
- Are you aware of what information to provide insurers, beyond which your proposal form may offer, in order to give insurers a more comprehensive view of your risk management procedures, ethos and other efforts to mitigate claims arising?
- Do you know which insurers are available to compete against your current arrangements?
Our specialist Professional Indemnity team is dedicated to the surveying and valuation sector and supports businesses of all sizes from sole practitioners’ through to large international practices. We have direct access to insurers and are committed to supporting our clients through regular updates and webinars on issues that impact risk. If in doubt, talk to us. We will be pleased to discuss any challenges you may be facing and consider how best we might support you.
Greg Harrison - Larger practices
Greg is an expert in Professional Indemnity for property and construction professionals. He works with clients from across the sector, including engineers, surveyors, and architects. If you have any questions about PI – or any other insurance that affects the property and construction industry – just drop him a line.