Professional indemnity insurance

In the insurance industry in the last 18 months there have been significant events, such as terrorist attacks in New York, and the operating loss and demise of HIH, which have substantially changed the environment for public liability and professional indemnity insurance. There are fewer insurers and less competition in the industry, which has resulted in a reduced choice for consumers, high premiums and more stringent insurance policies.

The Real Estate Institute of Australia has made formal representations to Federal Government, emphasising that:

• public liability and professional indemnity insurance are inextricably linked;
• premiums have generally increased 40-400% for only $1m insurance cover;
• excess for claims has increased up to ten times;
• most underwriters now either entirely exclude bodily injury/property damage claims or severely curtail it from real estate agents professional indemnity insurance.

REIA proposes that the Government consider:

• consistent claims laws and damages awards;
• capping damages for some types of compensation;
• threshold and criteria for claims to remove trivial claims;
• restrictions on lawyers advertising for personal injury matters; and
• establishment of an insurance pool to be accessed by not-for-profit community organisations.

REINSW has undertaken to establish its own insurance company in 2003, known as RealCover, in order to provide appropriate insurance for its members.

For further information contact the REIA Secretariat at reia@reiaustralia.com.au

May 2003