Surveying is one of the more established professions and as such is regarded by the PI sector as a 'traditional' profession. All Chartered Surveyors are members of the Royal Institute of Chartered Surveyors (RICS). The RICS regulates and promotes the profession and provides other services such as information and guidance to its members, governments and the public. A separate professional body representing a smaller group of Surveyors, The Incorporated Society of Valuers and Auctioneers (ISVA) was in existence until recently but has now merged with the RICS. Not all Surveyors are members of the RICS, there are many Surveyors who operate outside this professional body and across a wide spectrum of activities.

Chartered Surveyors and technical Surveyors provide advice on aspects of land, property, construction and the associated environment issues. The profession is varied and many Surveyors specialise in one or more fields.

As a class overall, virtually no PI insurer has ever made money out of insuring Surveyors other than in the odd isolated year.

What do Insurers look for?

Size of practice

One of the major factors that determines insurers rate and underwriting criteria is the size of the practice. This can be established in two ways; the number of partners and staff, and the gross annual income of the firm.

Qualification and experience

In line with underwriting philosophy across the professions, insurers need to satisfy themselves that a Surveyor is suitably qualified to carry out the work undertaken on behalf of his client. In the event that the Surveyor is unqualified then insurers normally require a CV in order to establish the extent of the Surveyors' experience.

Type of work

Insurers will be particularly interested in what type of work the proposer is involved in and the split of annual income derived from each discipline:

Quantity surveying

• QS will calculate the bills of quantities in order to cost the project and pass the project out to contractors for tender. A QS is usually responsible for the interim certificate, a process by which the calculation of work completed and materials on site allows for a contractor to be paid.
• Historically considered low risk but increased claims activity recently.

Building surveying

• A building surveyor has the design skills in surveying. They will typically be involved in the design and supervision of standard type buildings such as houses, factories and warehouses, etc. See also Architectural work.
• Medium risk dependant on the contract sizes and extent of responsibilities.

Residential and commercial estate agency

• The sale function that may be carried out by the Surveyor, either by conventional methods or by auction.
• Claims are infrequent and activity considered low risk.

Residential property management

• Activities may involve the management of leasehold property on behalf of a freeholder or the rental and management of residential property.
• Low risk, low value and infrequent claims.

Commercial property management/land management

• Following the completion and sale of a development there will be a need to manage it, i.e. ensuring maintenance and services are maintained.
• Medium risk

Rent reviews/lease renewals

• The management of commercial property sold under lease may require the periodic assessment and review of rental being charged. The Surveyors may be appointed by either the landlord or the tenant to carry out this function.
• Medium to high risk depending on what the speciality is.

Land/mineral and hydrographic surveying

• Specialist surveying area of activity - can include building site setting out, mining work, the analysis of land for mineral, water or pollutants. DM has a supplementary questionnaire for land surveyors that elicits the necessary information.
• Medium to high risk depending on the speciality.

Planning and development

• The formulation of preliminary plans and drawings and the application for planning permission.
• Claims are infrequent so low risk.

Project management

• Projects are often managed, administered and controlled by an expert on behalf of the client.
• High risk

Architectural work

• Design and/or supervision of buildings. It is important to establish the contract values and the extent of the responsibility. Is it design only or is it design and full project management?
• Medium to high risk depending on the contract values and the extent of responsibility.

Residential and commercial surveys and valuations

• The main area of activity for many Surveying practices, this involves the investigation and analysis of property in order to ascertain its condition and market value.
• High hazard work, with poor overall claims experience especially in times of property deflation.

Auctioneering

• The valuation and sale of property or goods at auction.
• Low risk for property and chattels but high risk for fine art.

High hazard work

Valuations provided by Surveyors in the 1980's gave rise to a deluge of claims in the late 1980's and early 1990's following the property crash in the early 1990's. The overheated 1980's property market led to overworked Surveyors paying inadequate attention to property condition and comparable property prices, which when added to totally inadequate file maintenance and enthusiastic lenders, led to a disastrous period of claims. Borrowers with financial difficulties defaulted and lenders found that the depressed price achieved on subsequent sale was often inadequate to cover the outstanding loan. Insurers fear a return of the 400% loss ratios experienced in the early 1990's.

So, insurers now look closely at the level of valuations carried out by a Surveying practice. They look at the amount of valuation business, its location geographically, the average and highest values and the claims experience. Other areas of interest for insurers include:

• Contract sizes - There is a direct relationship between the size and complexity of the job and the exposure.
• Technology - Is the firm using 'cutting edge' technology or standard, tried and tested processes?
• Overseas exposure - Does the practice carry out work for overseas clients? Careful consideration would be paid to such work carried out for US or Canadian firms.
• Retroactive exposure - Does the practice have an exposure to claims arising from past work, whether in the current firm or a former practice?
• Environmental exposure - Does the firm knowingly get involved in the environmental field?

A proposal form is available in Adobe Acrobat format by clicking the links below.

Surveyors Proposal Form

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