008 Greg Harrison: PII For Residential Surveyors in an Uncertain Market

Marion Ellis talked with Greg Harrison, Associate Director in the Professional Indemnity team at Howden Insurance Brokers. Howden have been the RICS preferred professional indemnity broker for approaching 10 years and more recently, preferred broker for Cyber Liability.

Greg manages the PII insurance programmes for some of Howden’s medium to larger size property and construction accounts, and represents Howden at industry groups, including the Cross Sector Residential Valuation Forum and its Commercial counterpart.

Now, PII renewal is on everyone’s mind in the surveyors community. Premiums seemed to have doubled, and we worry how we’re going to get covered. So Greg helps us by answering some of the questions concerning residential valuation that the members of The Surveyors Hub posed on RICS PII Webinar held on 15th April 2020.

Surveyors and Valuers in an Uncertain Market

“It all comes down to market uncertainty,” says Greg. “The insurance market for surveyors probably started to become more nervous following the referendum and Brexit, with a fear of seeing another wave of claims against valuers.

The two key messages, following Lloyd’s performance reviews across the whole market, are that growth is secondary to performance, and that there’s no obligation to write new business for the sake of premium income, especially in volatile areas such as claims activity and valuation. Insurers are looking to reduce their exposure in volatile areas, and they have to justify the cases that they take on much more now. Unfortunately, the situation with COVID-19 has brought more questions to the table.”

What Surveyors Can Do to Secure the Renewal of PII

“It’s difficult to say whether or not it’s beneficial for a firm to spread themselves more thinly across various service lines, such as valuation, management or something third,” continues Greg.

“There’s an argument for both being a specialist or being a Jack of all trades. Premiums are generally calculated using a model which applies a premium rate to each discipline that the firm undertakes, and the rate will be a percentage of the firm’s total turnover. Ultimately, insurers want to see that any business is operating specialisms that are understood, and that the individuals undertaking the work have the relevant expertise and knowledge to carry it out effectively. That’s what’s really going to make the difference.

So surveyors can explain what they’re doing, give insight into the business procedures and how it is run, and show up with reasonable confidence.

The best bit of advice that I can give is to start your PII renewal process as early as possible, I would say 12 weeks before the expiring of the current policy. And If you haven’t heard from your broker, then pick the phone and call them. Equally, your broker should have as much time as possible in the market undertaking the negotiations and discussions with insurers, no less than four weeks ideally,” Greg advises.

Improvements in the Surveying Industry Over the Last Decade

Compared to ten years ago, when the quality of valuation was much lower and there were many more claims against valuers, the standards of surveying and valuation have significantly improved.

Dr Oonagh McDonald’s Report with recommendations for balancing risk and reward for sustainable valuation, and Mortgage Market Review (MMR), have raised awareness to the key issues in almost every aspect of the valuation market at the time.

“The impact that these reports have had is that they have certainly assisted in the improved risk landscape in the surveying valuation market, which we believe is a far better place now for insurers than it ever has been,” says Greg. “It gave insurers the positive messages of all the good measures that have been implemented in the industry, and raised important awareness around much needed change, which I think contributed very positively.”

Falling into Assisted Risk Pool during COVID-19

There is another fear among surveyors, that if they don’t obtain PII, they might drop into ARP which is seen as a stigma by some brokers.

“My personal experience of dealing with firms that are in the ARP, has always been to try and get them back out to the open market,” says Greg.

“On too many occasions over the years, firms in the ARP have not been there because of variation in their risk profile or higher claims activity. It was because the lack of insurance availability and working with illiquid brokers, who didn’t have the necessary expertise, wasn’t sure about what information to provide to the insurer, and in the end wasn’t able to produce the most optimum outcome. That’s why I’ve always been a huge advocate in getting more information, beyond which a proposal form can provide.”

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