The views of the PI insurance underwriter

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Tina Booth is the Professional Indemnity Underwriting Director at leading specialist commercial insurer, CNA Hardy. With over 15 years experience of underwriting PI insurance for construction and surveying professionals, Tina talks to Emma Vigus about her concerns and predictions with regards to PI insurance for the surveying profession.

Who are CNA Hardy?

CNA Hardy is part of CNA Financial Corp, the 8th largest U.S. commercial property and casualty insurance company. Established in 1897, we have approximately 7,000 employees, serving businesses and professionals in the U.S, Canada, Europe and Asia.  We are a financially stable ‘A’  rated insurer and underwrite approximately $8bn gross written premium per annum. 

We’ve been underwriting UK professional indemnity insurance for 40 years via a Company Market and Syndicate 382 at Lloyd’s and we operate from offices in London and the UK regions.

How did you get into PI underwriting?

I came back from travelling in 1999 and went to a career’s day at Hiscox.  I subsequently joined Hiscox as a trainee underwriter and stayed for 8 year’s before joining CNA in 2004.  I really enjoy the variety that PI underwriting provides.  I get to meet a really broad range of people and I value the fact that PI underwriting is still done a face to face basis, which allows me to meet both brokers and their insureds. 

What’s going to happen to PI insurance rates for surveyors?

We’re predicting insurance rate rises across the board for all professional services firms and those rate rises won’t just impact PI insurance. 

Insurers have been hit hard by cat losses from the US property market, on the back end of the hurricane season and, closer to home,  we are dealing with the economic uncertainty created by Brexit and increasing regulation with the implementation of GDPR on the horizon. 

We are also concerned about the long term impact of the Grenfell tragedy and the collapse of Carilion on both construction and property insurance. The Hackitt review  suggests that the whole building industry needs to be overhauled and that’s naturally going to have a knock on effect on insurers perceptions of the risks associated with insuring firms operating in those sectors.

What about claims?

We don’t have any specific concerns regarding claims against residential surveyors and valuers at this stage.  Low level missed defects claims are always cropping up but we can legislate for those because they are a ‘given’ when it comes to underwriting surveyors and valuers. 

The reported rise in repossessions in Q42017 is slightly concerning and whilst the UK residential property market is relatively stable, we always encourage surveyors to undertake their work with eye on what could happen if the property market collapses.

We underwrite a lot of construction PI so we are understandably very concerned about the impact of Grenfell but it’s going to take several years for the claims arising from both Grenfell and other buildings where fire safety has been called into question to work through the system. 

The continued rise in Cyber crime, particularly Friday fraud which is now starting to impact a broader range of businesses, will trouble the insurance industry in its entirety. It’s important to bear in mind that a good proportion of the losses arising could impact PI insurers, particularly where a firm doesn’t have stand-alone cyber cover in place. 

Are risks increasing?

Yes.  Regulation is increasing as are regulator’s appetites for levying large fines.  Contractual terms are increasingly onerous and we are living in uncertain economic times. 

Thinking specifically about surveyors and valuers, does higher risk lending concern you?

 Yes it’s a concern but we’re also worried about surveying firms effectively buying in business by cutting their fees, particularly when the fees for a mortgage valuation are already too low.  It’s concerning that it can cost between £1,000 – £2,000 in fees to sell an average property and yet the fee for a mortgage valuation can be as low as £70.00.  We do look at the average fee charged per instruction by firms and we take it into account when determining whether we want to insure the business and, if so, at what price.

Does technology make a difference to risk?

It won’t necessarily help reduce the number of notifications but I do think it will help ensure that a firm (and its insurers) can mount a robust defense and we are generally enthusiastic about a system that forces surveyors to follow a standardised process.   

Looking to work done pre the Global Financial Crisis, the file was often so poor that it was incredibly difficult trying to defend the valuer. At the very least, we would expect technology to resolve that by ensuring that there is actually a comprehensive file, accompanied by photos, comparables etc. to review in the event of a claim

What do you look for in a good risk?

A good claims history.  We don’t expect firms not to have claims but we expect them to take them seriously when they happen, particularly with regard to the efforts the firm makes to avoid reoccurrence.   We want to see evidence that a firm has learnt from past mistakes and bolstered its processes with regard to peer review and oversight. 

We prefer to insure firms that specialise in certain areas rather than trying to cover everything.

We like firms that charge the right fee for their service rather than charging the lowest fee to win the business.

Why do you enjoy working with Howden?

We have a long standing relationship with Howden and we value that.  You provide a rounded offering and you work hard to help firms with their risk management.  You’ve also got a good book of longstanding clients.


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