UK insurer MGAM, an Acrisure partner, and SCOR, in partnership with the Department for Levelling Up, Housing and Communities, will deliver a new Government backed professional indemnity insurance (PII) scheme for EWS1 assessors, according to an announcement.
The external wall fire review process forms (EWS1) were developed by the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association to support the valuation process for high-rise residential buildings with cladding.
The PII scheme, announced in 2021 and to be launched in September 2022, will be delivered by MGAM through an insurance provided by SCOR, with Her Majesty’s Government providing reinsurance coverage to SCOR.
Romain Launay, CEO Specialty Insurance of SCOR P&C, said: “SCOR is delighted to be partnering with MGAM and the Department for Levelling Up Housing and Communities to deliver insurance coverage that will ensure EWS1 assessments can be carried out properly and in a timely fashion, enabling the purchase, sale or re-mortgage of homes in a challenging housing market.
“This initiative aligns with SCOR’s raison d’etre, allowing us to reduce the protection gap for the ultimate benefit of society.”
The scheme will last for five years with hopes that after that time, insurers will step back into the market, which will remove the requirement for a state-backed scheme, MGAM noted.
This is due to a significant shortage of insurance companies willing to provide professional indemnity (PI) cover to firms undertaking assessments of external wall systems in mid- and high-rise residential buildings.
Which contributes to issues in certain segments of the property market with buyers unable to secure the necessary certification in order to secure a mortgage, MGAM explained.
Jason Anthony, CEO of MGAM Limited, said: “When the government approached the market for a potential solution to this issue, MGAM recognised the significant protection gap in the market and immediately responded to, and later won, the tender to administer a PI scheme for EWS1 assessments.
“We have worked closely with DLUHC and SCOR to create a solution that, over time, will enable the private markets to provide appropriate PI cover to assessors.”
Lord Greenhalgh, Minister of State for Building Safety and Fire, said: “We are taking more decisive action than ever before to tackle over cautious lending and help identify fire risks, and I am delighted that MGAM and SCOR are joining us in these efforts.
“Our new indemnity scheme will give EWS1 assessors the confidence they need to exercise their professional judgement and take a more proportionate approach to their assessments. This is on top of nearly £700,000 in funding we have given to train more assessors and I look forward to seeing the real-world impact of this.”
