Home / Corporate / Coverforce defends new PI product
19 October 2020
Coverforce has moved to dispel doubts on a new professional indemnity (PI) insurance product after a surveyors’ group warned the cover may not meet Australian regulations.
The broker has put up what it says is “accurate information” about the product, which comes with no cladding exclusion and was developed in collaboration with the Royal Institution of Chartered Surveyors (RICS). Coverforce is a preferred broker of RICS.
“We have received a high volume of enquiries regarding this product and we believe it’s important to have accurate information available for stakeholders to allow them to make informed decisions,” a spokesman for Coverforce told insuranceNEWS.com.au.
"For more than 18 months we have been working hard with insurers to be in this position where we are now able to offer professional indemnity insurance including cladding cover. It’s a great news story for the industry.”
The Australian Institute of Building Surveyors said last week it has been “advised of concerns” about the product. It says it has seen the product’s policy wording and believes it is “inconsistent and some clauses relating to cladding, finishing systems and wall panelling are contradictory in terms of what is covered”.
Coverforce says the product information, which is provided in a “frequently asked questions” format on its website, seeks to provide “a source of clarity around the security, coverage features and intended market”.
The product is 100% backed by Lloyd’s, offering limits of $1 million and $2 million.
For limit requirements over $2 million, an "excess-layer" policy will need to be arranged above the primary $2 million cover. The "excess-layer" policy will likely have an industry cladding exclusion.
It is designed for building certifiers with a turnover of less than $5 million and does not include a “cladding” or “non-compliant/non-conforming building materials” exclusion.
Coverforce says the policy has been designed to be compliant with relevant Australian legislation for certifiers.
Insurers globally have introduced cladding restrictions in PI policies since last year to mitigate exposure to the controversial building material, which has been linked to many fire incidents including the Lacrosse building in Melbourne and London’s Grenfell Tower.
However, Coverforce says it and RICS have worked to address key issues impacting insurer confidence as part of the development of the PI product.
There are two conditions that must be met before a policy is issued. A minimum 50% of the professional staff of the insured must become a chartered surveyor or associate member of RICS within the period of insurance, and the insured must become a firm regulated by RICS within the period of insurance.
“Without RICS involvement, insurers would not have introduced new insurance capacity into a distressed sector,” Coverforce says. “The confidence of insurers has been built upon the assurance capabilities of RICS as a means to buttress the co-regulatory environment for individuals and firms.”
Click here for details about the product’s terms and conditions.