London: The Australian Institute of Building Surveyors (AIBS) has voiced concerns at a number of new professional indemnity (PI) insurance products in the market, warning its members to fully investigate terms and conditions.
In a communique issued yesterday, AIBS says some of the new products are backed by unauthorised foreign insurers (UFIs) who are not subject to Australian law.
“Because unauthorised foreign insurers are not regulated by the Australian Government, there is no guarantee that they are obliged to maintain sufficient financial adequacy to cover claims,” AIBS said.
“If they refuse to pay a claim you would need to take legal action against them in a foreign jurisdiction, a difficult and expensive exercise with little chance of success.”
Aside from the UFI issue, AIBS also took aim at another new product that is offering cover of up to $2 million with no cladding exclusions.
While it did not name the product or people behind it, insuranceNEWS.com.au understands AIBS was referring to the PI cover distributed by broker Coverforce.
Coverforce moved quickly to defend its product, which was launched in collaboration with the Royal Institution of Chartered Surveyors (RICS) and is 100% secured by Lloyd’s.
AIBS says it has been “advised of concerns” about the product, which was announced last week by RICS. RICS worked with Coverforce, its preferred local broker, to launch the product for the Australian market in response to withdrawal of cladding coverage by insurers globally.
AIBS 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”.
“Therefore, we urge all members considering obtaining any insurance products that are new to the Australian market to read the ‘fine print’ very carefully before accepting any quotation as the devil is always in the detail,” AIBS said.