Claims arising from surveyor errors could lead to higher premiums
The current subsidence event year could lead to premium hikes and shrinking capacity in the professional indemnity (PI) market, according to a leading PI underwriter.
Hiscox UK PI manager Justin Bowen said the PI market could suffer as property insurers subrogate claims to PI insurers in cases where surveyors have failed to spot existing subsidence.
He said: "If we have an increase in subsidence claims on property policies, then by definition this will impact property professionals.
"As yet, our claims activity in this area has not grown disproportionately, but we would expect a time lag."
Bowen said that after the last subsidence event year, it took two years for subsidence claims to hit the PI industry.
The potential problem for PI insurers was reinforced by Norwich Union (NU). An NU spokeswoman said that in the event of liability on the part of a surveyor, it would look to recover costs.
Bowen warned that unless insurers stuck to responsible pricing, the price and amount of PI capacity could be hit.
He said: "If there is a claims surge then only those underwriters looking to provide sustainable cover in the long term through prudent underwriting will be prepared for this event.
"Those who do not will have insufficient premium reserves to cover claims, and I assume they will look to raise premiums or cease writing the business."