Top 5 risks affecting surveying firms in 2023
Every year brings new challenges for surveying firms and 2023 has the potential to see a rise in claims in a number of key areas. Here we pick out five trends that we expect to make headlines in the sector and which underline the need for robust insurance and broker expertise.
The UK has been in an economic slump for over a year. A cost of living crisis has emerged, driven by steep rises in inflation. The recent pandemic and the invasion of Ukraine by Russia have all contributed to this. As a result, the construction and property sector has to deal with the consequences of these far-reaching national and global events.
Interest rates have risen, and property prices are generally falling across the country. Although not yet on the scale of 2008, the knock on effects of these rises will result in defaults on loans, and an increase in repossessions as loan repayments become more unaffordable.
A number of bridging loan companies have also recently entered administration, and their diverse lending criteria and poor record keeping makes them a high risk client for surveyors who are considering undertaking this type of work.
Weather related claims
Weather conditions and high amounts of rainfall are causing roofs to deteriorate at an increased rate, and surveyors should consider all these factors when advising on their likely lifespans. Local builders continue to recommend full replacement of roofs that only need repairs, and re-inspections (complete with photographs) should be undertaken before any works commence, so that evidence is available to rebut any potential claim.
Energy crisis – damp/condensation issues
According to the End Fuel Poverty Coalition, there are now an estimated 7 million households in fuel poverty, and this could rise to 10.7 million by spring 20231. As costs have increased, more families are unable to afford to keep relying on their central heating systems to keep them warm. We anticipate an increase in damp and condensation related issues being identified by surveyors for the foreseeable future and recommendations in reports should be clear in highlighting the risks of any identified damp or mould issues.
We are seeing more complaints from buyers regarding issues once they have moved into the property. Due to stretched domestic budgets, recommendations in reports are not being followed, and complaints and claims are then being made for defects that buyers should have either investigated further, or simply decided to ignore.
We have seen spurious complaints made where it appears the buyer either does not want to pay the survey fee, or is essentially angling for a refund. As always, good file notes and record keeping remains the key here, along with a robust complaints handling procedure that should be provided to the client at an early stage, in order to manage their expectations.
Hardening of the insurance market
The hard market remains an issue for surveyors, and not just in terms of increased premiums. Insurers are now attempting to take more points in relation to late notifications, and breaches of the policy terms and conditions, such as making offers to settle without authority.
Most surveyors’ policy wordings require notifications of any circumstance that “may” later arise in a claim. This is a low bar threshold, and particular care should be undertaken at renewal to ensure that any relevant circumstances are disclosed to the insurer before the inception of any new policy.
Although RICS compliant wordings offer a number of protections for late notifications, insurers can (and will) decline cover, if they consider that a “claim” had been made in a prior policy year, and had not been reported. Other remedies allow them to charge an increase in premium, or even adjust the amount of any indemnity offered to pay a claim, if they consider that their position has been prejudiced in any way.
Legal, Technical & Claims
Deepa V. R.
Legal, Technical & Claims