The quantity and cost of handling alleged negligence claims is having a significant impact on the cost of PII, not just for firms who have received claims but for the market as a whole.
These structural problems could reduce client protection, limit competition within the market and lead to market failure.
RICS is looking to combat this and has commissioned a working group of valuation experts, including Sir Bryan Carsberg, and key members of the insurance industry.
The group's report has been launched today and RICS is now calling for input from members and stakeholders to help shape the final report.
The three-month consultation opens on 1 December and the final proposals will be put to the government, lenders and the insurance sector early next year.
Some key recommendations:
- RICS to work with insurers to examine whether an alternative approach to the current claim system could work and what the impact would be on the market, valuers and the wider public
- RICS to consult government agencies and regulators to assess the impact of decreasing industry competition
- RICS to explore the option of an alternative scheme to assist with claims above a given value threshold
- RICS, valuation firms, insurers and lenders to review risk and reward levels in contracts
Robert Peto, RICS spokesperson, commented:
"RICS is extremely concerned about the practice of speculative claim letters being sent to property valuers on behalf of banks.
"For this reason, a working group has been established to assess the problem and create a set recommendations for our members and the wider public, aimed at tackling the issue.
"The proposals have now been drafted and we are interested in hearing from RICS members, or those who have experience and understanding of the issue, in relation to the recommendations.
"We will be publishing the final report early next year with a view to tackling this problem which is putting the valuation profession and public protection at serious risk."
The RICS working group report on professional indemnity insurance (PII) for valuations in the UK is available here.
