Rising claims and fraud allegations make survey and valuation a riskier prospect
Travelers is no longer offering professional indemnity insurance to property valuation surveyors, as the sector continues to be plagued by fraud and rising claims.
The insurer stopped writing new business in March last year for surveyors valuing properties, and has recently stopped renewals.
Survey and valuations is being dubbed the “next solicitors’ professional indemnity” in the aftermath of Travelers’ exit. Insurance Times understands that Canopius also pulled out of valuers six months ago.
Manchester Underwriting Management chief executive Charles Manchester said he dropped valuers’ PI when he headed up HCC International four years ago, and some of the spare capacity was snapped up by Travelers.
Manchester said: “[Travelers is] not a bad company. But the fact is they made the wrong choice, but then so did a lot of other insurers.”
Valuers came under pressure to carry out as many valuations as possible during the property bubble, but following price collapses their valuations are being scrutinised, which is leading to claims.
There are also a significant number of cases emerging of collusion between valuers and property developers to hike up prices.
Manchester said these problems have led to a rising number and increased size of claims.
He added that his underwriting agency would not write this class of business, and that insurers would need to charge between 20% and 30% of valuers’ fees just to stand still, compared with pre-recession fees of between 7% and 10%.
A Travelers spokesman said: “Travelers does not comment on policy and customer issues such as this.”
UIB divisional director Simon Lovat said: “Insuring firms that undertake survey and valuation work is becoming more difficult. This announcement from Travelers will make the market even harder. One wonders whether it will become similar to the solicitors’ PI market.”
However, as has happened with solicitors’ PI, when some insurers exit, others spy an opportunity. Torus has begun writing valuers’ insurance.
A Torus spokesman said the insurer entered the PI market last year and that valuers was one of many different professions covered. He said Torus was writing SME risks, not the larger risks that had suffered most from claims.