The Department for Levelling Up, Housing and Communities (DLUHC) recently announced a Government-backed professional indemnity insurance (PII) scheme for fire safety professionals undertaking EWS1 (external wall system) assessments.
The scheme has been set up in response to the shortage of insurance companies who are providing PII to firms undertaking such assessments in mid- and high-rise residential buildings.
This shortage is, to an extent, behind issues in parts of the property market with buyers unable to secure the necessary certification to secure a mortgage on, and sellers struggling to offload, properties above 18 metres in height.
The assessment will clarify whether cladding remediation work is needed on a high-rise building, thus giving lenders confidence and assurance.
The scheme is set to launch in September 2022. The Government Actuary’s Department (GAD) has estimated expected losses at around £100 million.
Stuart Andrew MP, then Housing Minister, said:
“The contingent liability being claimed is unlimited because there is no theoretical cap on the size of claims that could be made.
However, the risk is limited by the number of buildings, and number of EWS1 assessments.
To further mitigate this risk, we will only be offering professional indemnity insurance cover for accredited professionals who have the requisite training, expertise and knowledge to undertake the EWS1 assessment.
In addition, completed EWS1 assessments will be subject to an audit process to ensure they are being completed accurately with due process being followed.”
He continued:
“The cost of the scheme, including the expected losses, will be offset in full through premiums: EWS1 assessors will be required to purchase PII policies for any EWS1 assessments they complete, with the funds gathered being accumulated and subsequently used to pay out any insurance claims successfully made against the assessors. In this way, the scheme will operate as fiscally neutral for Government.”
One Response
None of this actually means anything, we should be warning consumers that the EWS1 is not worth the piece of paper that it is written on. There is a disclaimer on there agree by UK Finance that it cannot be relied upon by purchasers or mortgage lenders when deciding whether or not to buy or lend. People will still be trapped as there is a shortage of people who can actually do the forms and the wait will continue for those who wish to sell or to re-mortgage, not to mention unpredictable costs for any remediation if it is required (or idiotic fire risk assessments with a stay put policy) & changing legislation. Currently advising clients to consider buying rope ladders or learn to use a parachute to escape – what would they do if they are trapped? Whilst not the norm, these things do happen.