Valuers caught between high premiums but low valuation fees
The valuers’ professional indemnity (PI) insurance market could fail if soaring premiums are not tackled, according to a Royal Institute of Chartered Surveyors (RICS) report.
The problem is that the volume and cost of alleged negligence claims for surveyors carrying out valuation work has hiked up premiums, but valuation fees are very low, the report said.
“If no action is taken, valuation for secured lending could potentially become an uninsurable activity – effectively reducing the provision of this service to a limited few, or making this an area of expertise unsupported by insurance,” the RICS Report on Professional Indemnity Insurance (PII) for Valuations in the UK said.
“The structural defects in the market may create a situation where competition becomes very limited and customer choice reduced.”
The problem could be tackled by passing the costs of PI premiums on to clients through higher fees or else reducing risk in contracts, RICS said.
RICS has sent a consultation paper out to get opinions on the issue before they publish a final report.
The trade body also wants to discuss insuring surveyors with valuation exposure through mutual insurance groups.
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