The elephant in the room remains Professional Indemnity (PI) insurance and its relative cost.

I recently interviewed a potential recruit where we got onto the topic of PI. Their current employer has advised they have exclusions within their PI policy preventing them from advising upon “fire safety” and “basements” but they had not actually seen a copy of the policy exclusions for themselves.

I can’t imagine an instruction that doesn’t in some way involve one of those two things; whether it be a building survey, dilapidations assessment or a project. Invariably, our work involves some form of fire compartmentation, fire resistance, reinstatement cost assessment or the buildings have a basement! I asked how they physically go about their work, and they said it has not really changed the work they undertake. They advised barely any clients know of the limitations and they have never been asked by a client whether they were fully insured to undertake the work for them. I must admit, I don’t recall having even been asked the question myself, and within workplaces I have previously worked, I’m not sure I have ever seen and read the PI policy either. 

Following the meeting, I spoke with a client and I asked them whether they had ever actually checked whether a provider of services is fully insured, and they had not. They couldn’t recall ever asking a Surveyor anything other than the level of PI cover they provide. They informed me their consultants must have at least £5 million and sometimes £10 million but they never asked for details of any exclusions applicable to those policies.

The RICS require “Firms must ensure that all previous and current professional work is covered by adequate and appropriate professional indemnity cover that meets the standards approved by RICS”. The standards for firms providing surveying services are set out in a document titled “Professional indemnity insurance requirements regulation Version 9” which was last published on 2nd February 2022. There is a section covering “Fire safety exclusions” and it states “Insurers may impose a fire safety exclusion but will be required to make a request to RICS for this. Exclusions vary dependent upon insurer; however, from 1 May 2021 any exclusion will not apply to professional work relating to buildings four storeys or under. Firms should seek the advice of their insurance broker, as to the impact of such exclusions in their consideration of the appropriateness and adequacy of their insurance on past work and future work. RICS will take into account the current market availability of cover for fire safety and any advice received from the firm’s insurance broker in considering whether a firm has complied with the Rules of Conduct”.

I find the RICS wording a little vague. On the one hand, insurers may impose an exclusion and, if they do, the firm needs to consult with their broker! The RICS will then take into account market availability and advice from the firm’s broker in considering whether a firm has complied with their rules retrospectively. Nowhere within the RICS regulation can I find a requirement that a firm must notify their clients, or indeed their employees, of any exclusions that may apply to their policy and the work they undertake.

I wonder whether some firms and their investors opt for the cheapest available insurance. I firmly believe as Chartered Surveyors we should be doing the right thing and opting for the very best insurance we can obtain, to warrant our advice, to protect our clients and to protect our employees and their families. We have had great assistance over the years from an excellent broker Romero Insurance Brokers who have always worked hard to ensure we do not have any exclusions and we can offer the correct level of cover, which invariably comes at a significant premium. We need to encourage more discussion around this topic and to have clearer regulation on the matter.   

Finally, on the question of whether elephants are scared of black cats, I understand “In the wild, anything that suddenly runs or slithers by an elephant can spook it…” according to Josh Plotnik, a researcher of elephant behaviour and intelligence at the University of Cambridge in England!

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