16.05.24

Investment Agents’ PI : many insurers avoid it believing such work to be high-risk. Our panel of insurers disagree!

Given the number of names on the RICS’s list of approved insurers for chartered surveyors professional indemnity insurance, you would imagine that there is sufficient insurer appetite for all types of RICS regulated activities. However, many practices that derive all or part of their earnings from investment agency work, might beg to differ.

The reality is that many RICS qualifying insurers have little or no appetite for Investment agency work, believing it to be high risk. And therein lies the problem; too often the underwriter is looking at the word “investment” when he/she should really be focusing on the word “agency”. These Insurers are concerned that a practice may have discretionary investment authority on behalf of its client, or that it may give investment performance warranties or undertakings, neither of which is the case. They are concerned about a firm providing formal valuation advice, even though any opinion as to value is fully caveated as such and not to be relied up upon as a Red Book valuation. Additionally, many insurers are wary of the absolute size of the transactions being undertaken and on which the agent is advising, believing that any claims arising in the future are likely to be proportionately significant.

Despite many RICS insurers’ view that Investment Agency is high risk work, in our experience, this isn’t borne out in terms of claims arising. In nearly 20 years of arranging PI insurance for investment agents, or firms that derive a significant share of their earnings from such work, we have only known three claims being made, and none of those matters related to professional negligence.

There is a solution to this problem, an A-rated RICS qualifying insurer with a long and proven track-record in the surveyor market, that properly understands investment agency and has a genuine appetite to write new investment agency business. Supported by that insurer, and in collaboration with the Niche Investment Agents Society, Cox Mahon operates an exclusive PI insurance facility for investment agents. Now in its 8^th year, our facility has attracted many of the most well-respected practices in the investment agency field. Whether they be sole practitioners or multi-partner firms, they all share a passion for investment work and a keen desire to be niche, independent and specialist, in contrast to the giant multinationals. At Cox Mahon, that’s a contrast we see in ourselves.

Article provided by Andrew Kenyon, Director, Cox Mahon

About Cox Mahon

Cox Mahon Ltd is an independent, specialist insurance broker for the RICS profession. From offices in London and Shrewsbury, we have 20 years of experience placing PI insurance for property professionals of all shapes and sizes, including advising on the PI implications of mergers, acquisitions and closures. If you’d value a fresh look at your firm’s arrangements, please call or email us; we’d be delighted to have a no obligation conversation.