Surveyors’ PI rates could double as claims keep rising

Marsh has reported that surveyors could be facing rate increases of up to 100% for their professional indemnity (PI) insurance.

Marsh predicted rate rises of between 10% and 100% as insurers respond to a four-fold increase in claims against surveyors over the past 12 months.

The rate rises are also driven by insurers pulling out of the market, meaning less competitive pricing from the remaining players.

The hikes could force surveyors out of business or into mergers, Marsh said.

Senior vice-president in financial and professional practice David Stocks said: “The dramatic increase in claims notifications has affected insurers’ appetites to take on surveyors’ professional indemnity risk, meaning there is less capacity in the market than 12 months ago.”

In other areas of the professional market, architects are being hit with rate increases of between 10% and 15%, according to London broker First City partner Victor Knope.

Knope said the declining property market, in which investors had lost out, had triggered claims against architects. He added: “With developments, it is the white-collar architect who is around when things go wrong.”

Stocks said: “Rates are now extremely variable and depend largely on the types of risk and claims records of the surveyor, and its ability to demonstrate the robustness of its risk management systems and procedures.

“Insurers are being much more selective, as they are trying to avoid a repetition of the fallout from the last property downturn in the early 1990s.

“Given the current situation, many larger firms are being forced to take higher levels of self-insurance. We are receiving more enquiries from surveyor firms looking to set up their own captive insurance companies.

“We are also now seeing a significant uptick of claims allegations of fraud and dishonesty.”