Changes to RICS Rules of Conduct and the impact on Professional Indemnity Insurance
On 1st May 2020, new changes to Rule 9 of ‘Rules of Conduct for Firms’ from The Royal Institute of Chartered Surveyors (RICS) came into effect.
Due to the current unprecedented times and hardening PI market, there have been several changes made recently to the terms to which insurers need to underwrite for Chartered Surveyors’ professional indemnity insurance.
Previous changes to Rule 9 in January addressed some of the difficulties RICS members faced in obtaining run-off cover, which had been amplified by the UK’s economic situation.
RICS has now revised the Minimum Terms wording of Rule 9 again to help clarify the requirements to be met by both firm and insurer.
In brief, the changes are:
- Fire Safety exclusions
The defined fire safety exclusions have been removed from the minimum policy wording and replaced with temporary wording, enabling insurers to apply their own fire safety exclusions. This means that it is now up to the Chartered Surveyor firm to procure insurance which is ‘adequate and appropriate for the firm’s work.’ Under the Insurance Distribution Directive, insurers must provide a Product Summary clearly stating the ‘intent and potential impact of the exclusion’.
- External Wall Fire review (EWS)
RICS have added an ‘exclusion of liability’ to firms completing the EWS1 form. The form is part of the External Wall Fire review (EWS) process brought in in December 2019 regarding the potential fire hazards of materials used for external walls and balconies. This is in line with the minimum terms applicable to Solicitors’ professional indemnity insurance.
- Excess in relation to defence costs
More flexibility has been given to insurers to write terms surrounding the Excess cost.
- The general aggregate limit liability
The general aggregate limit liability refers to the most money that an insurer can be obligated to pay to an insured party during a specified period. Unlimited and round the clock availability has now been granted.
If you have any queries around these changes and how they may impact your PI insurance or firm, please do contact our experienced team.
Cox Mahon are market leaders in the commercial property sector. We are recognised for our ability to understand specialist businesses operating in niche areas by our clients and we are extremely proud that a significant number of our client relationships can be measured in decades, rather than years.
Source: RICS UK website