RICS response to RICS PII Market: Call for viewsJuly 2022
In July 2021, in the context of concern surrounding the effects of a hardened Professional Indemnity insurance (PII) market, the Royal Institution of Chartered Surveyors (RICS) launched a review of its PII requirements in the UK. In January 2022, RICS consulted on the outputs of this working group (link here) and provided an opportunity for members and other stakeholders including insurers, brokers and lenders to give feedback on a series of short and medium-term proposals on RICS’ PII arrangements – The RICS PII Market – Call for Views (see our related links here and here). RICS have now published the response and their conclusions from the call for views – RICS response to RICS PII Market: Call for views (link here).
The RICS consultation and call for views considered a number of prospective fundamental structural changes to their PII framework, which included the possibility of introducing self-insurance for part of, or the whole, profession through a mutual or introducing a master policy that is backed by insurers. RICS report that the majority of respondents indicated that they would not support any of these more ‘radical’ structural changes for fear that this would increase uncertainty and would not, in fact, lead to lower premiums or fewer claims. As such, the existing PII structure will be maintained, albeit with some amendment. Accordingly, RICS have confirmed that they will be working with insurers to redraft the minimum policy wording to build in more flexibility to ensure that RICS members have more options when it comes to being able to demonstrate that they have adequate and appropriate cover in place.
In the short-term, RICS have confirmed that changes will be made to the annual return to enhance the data RICS collects from regulated firms. A standard (likely non-mandatory) proposal form will also be drafted for use by RICS regulated firms. In addition, RICS will go ahead with developing a list of recommended brokers (in the knowledge that those brokers have agreed to a minimum level of service) that regulated firms can approach for PII.
To aid risk management, RICS will review its materials to promote engagement and education with all relevant stakeholders, and it will continue to engage with the Government about the challenges in the insurance market, highlighting liability capping as a potential option that has proved successful in other markets.
We wait to see how this develops as RICS take forward the various proposals.
Please contact David McArdle or Nic Pegg if you would like to discuss any of the above.Download PDF