Insurers review surveyors’ PI as credit crunch bites

The property market downturn is causing insurers to review the extent of professional indemnity (PI) cover they offer to surveyors, say brokers.

A rise in claims is expected against surveyors who are caught negligently or fraudulently inflating the value of homes, making insurers reconsider the amount of PI cover they offer to surveyors. A similar situation is emerging with solicitors, who also face rising claims.

Mark Roddis, executive director for Lockton International and head of SME PI, said: “Specialist valuers and surveyors are having a lot more difficulty in placing cover in the current climate. The concern is a repeat of the early 1990s, when there was a downturn in the property market and an upturn in claims against surveyors.

“Insurers are tending to move away from the high-end valuation risk and looking more favourably at the easier risks of property management, estate agency and quantity surveying.”

An ABI spokesman added: “The PI market overall is ultra soft and the rates have been going down and down. When you get a soft market, then that means PI providers are going to strip out some of the benefits.”

RSA is one insurer believed to be reviewing its PI cover for surveyors. Karen Brown, a director of Bristol-based National Professional Risk Solutions, a division of Lockton, said RSA recently insisted that brokers’ clients complete a supplementary questionnaire.

Brown said: “I believe RSA sees this as an opportunity to investigate its book and offer rates that reflect the aspect of the surveyors market that it wants to write. There are questions relating specifically to survey and valuation activity, and one might deduce that it is this area which will attract a higher premium rate.”

She added: “I have seen a number of surveyors’ markets take greater care in their quotations recently, which perhaps leaves those willing to continue in the wider surveying market more isolated.”

An RSA spokesman said: “We are categorically not reviewing or scaling back PI cover for surveyors. The survey is not new, we’ve been using it for years and do so just to get a better understanding of our clients’ business, as do many of our competitors.”