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Daily Insurance Industry News
Sunday 21st of January 2018
January 9, 2008

Professional Indemnity insurers expect claims deluge

by Gill Montia

Story link: Professional Indemnity insurers expect claims deluge

Professional Indemnity (PI) insurers are expecting a sharp rise in claims during the coming year because of mounting pressures on the commercial and residential property markets.

According to Flaxman Partners, the independent professional liability risk consultants, a fall in property prices will lead to an increase in defaulted loans and a rise in the number of repossessions.

In these circumstances, lenders may seek to recoup their losses by suing the professionals involved in the conveyancing processes.

Roger Flaxman, managing partner at Flaxman Partners, explains that: “Lenders will seek to recover their losses and could well go after the mortgage brokers, lawyers, accountants and surveyors who originally advised on the deals.”

The situation is made worse by a growth in the incidents of mortgage fraud, “driven particularly by organised crime syndicates, where professional advisers may have been induced to collude in the fraud by inflating values and misleading lenders”.

Mr Flaxman goes on to say that: “History has shown that these claims can be difficult and expensive to defend; very often there is insufficient documentary evidence on the professionals’ files to give them a robust defence.”

Flaxman Partners is warning that PI insurance premiums could, therefore, increase significantly and that policy terms and conditions could be tightened.

 

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