Trade body suggests toughening exclusion terms
The Royal Institution of Chartered Surveyors (RICS) has suggested changes to the valuers’ professional indemnity (PI) insurance market to improve how it works.
The main changes include:
- Letting insurers exclude cover for property valuations that breach suggested new minimum terms and conditions
- Drawing up a fast-track alternative to settling smaller claims
- Giving guidance to RICS members on terms of engagement, claims handling and risk
- Improving valuers’ standards through the Valuer Registration Scheme
- Continuing to work with the Solicitors Regulation Authority to monitor legal involvement in claims.
DAC Beachcroft professional risks partner Duncan Greenwood said: “Insurers will welcome the drive for improved quality as well as a possible tightening of the minimum terms, but there is nothing in the proposals which impacts on the current claims epidemic. They might well view it as little more than seeking to close the stable door after the horse has bolted.
“All too frequently claims are formulated on simple retrospective valuations and these are often contained in valuation reports obtained at the time of repossession. Ensuring all retrospective valuations are properly researched and use only material that would have been available at the relevant time would, in my view, also be worthwhile.”
Greenwood said that more claims were being brought against valuers after a perfect storm of a house price bubble, “arguably imprudent” lending and then a spike in mortgage losses as borrowers defaulted.
He added: “Combined with the current legal service funding arrangements, this created an avalanche of claims.
“Clearly, reform is crucial if the current imbalance is to be corrected, but implementation of the measures proposed might be easier said than done.”