Changes to minimum terms and conditions for regulated surveyors

Understand the latest changes to RICS minimum terms and conditions for surveyors professional indemnity insurance. How do the changes impact regulated surveyors?

Organisations regulated by the Royal Institute of Chartered Surveyors (RICS) are required to ensure that all work is covered by ‘adequate and appropriate’ professional indemnity (PI) insurance. As the risk landscape changes, however, RICS remain in discussion with insurance stakeholders (including PI insurers, brokers, and RICS member firms) to ensure the highest possible levels of protection are maintained — while remaining aware of any commercial restraints or restrictions in the ever-cyclical insurance market.

Accordingly, RICS recently introduced changes to the minimum terms and conditions (MTCs) for member firms’ PI cover, with effect from 1 July 2024. A full summary of these changes can be found on the RICS website.

The amendments cover the following areas:

Fire safety

For buildings up to four storeys, cover remains unchanged — for example, full civil liability insurance — without a retroactive date and limits allowed on an annual aggregate basis, including defence costs.

In the UK and Ireland, insurers are now required to provide cover for fire safety claims of buildings five storeys or higher. However, this cover only applies to negligence and excludes other bases of civil liability — such as, contractual liability. As insurers are entitled to apply a retroactive date of 1 July 2024, cover will only respond to claims involving work undertaken on or after this date. As with the current cover for smaller buildings, indemnity can be on an annual aggregate basis, including defence costs.

External walls

Previously, RICS participating insurers were allowed to exclude cover for external wall systems (EWS) work under the MTCs. However, following the 2023/24 consultation, RICS insurers must now provide cover for EWS, EWS1 forms, and fire risk appraisals of external walls (FRAEW) for buildings up to 18 metres (four storeys) high — as long as the work is undertaken and/or signed off by an individual who has passed the RICS External Wall Systems Assessment Training Programme.

Furthermore, there are minimum requirements of cover, including:

Cover can be limited to negligent acts, errors, or omissions, rather than provided on a full civil liability basis
A retroactive date of no later than 1 July 2024 may be applied
Indemnity can be provided on an annual aggregate basis, including defence costs

Cybersecurity

In April 2021, RICS changed its minimum policy wording to incorporate a clause that permitted the exclusion of losses, costs, or expenses stemming from a “cyber act”. This cyber clause was added at short notice due to RICS receiving feedback that insurers were taking inconsistent approaches when addressing this exposure.

The PI market has evolved since 2021 — particularly in its approach to addressing cyber acts and the issues around “silent cyber” cover. To ensure consistency moving forward, RICS has proposed an amendment to the existing cyber clause and will now allow underwriters to apply the IUA 04 017 clause — the default position of insurers shaping PI policies for the majority of professions.

Please Note – the changes outlined above are in respect of the RICS minimum terms and conditions for firms in the UK and Ireland only.

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