Government supported PII program for EWS-1 assessors to be provided by MGAM and SCOR

A NEW government-backed Professional Liability Insurance (PII) scheme for EWS-1 Assessors will be implemented by MGAM (itself an Acrisure partner) and SCOR in partnership with the Department of Leveling, Housing and communities.

The Exterior Wall Fire Review Process Forms, commonly referred to as EWS-1 forms, have been developed by the Royal Institution of Chartered Surveyors (RICS), UK Finance and the Building Societies Association to support the building appraisal process high-rise residential with siding.

Currently, there is a significant shortage of insurance companies willing to provide professional indemnity coverage for companies undertaking exterior wall system assessments in mid-rise and high-rise residential buildings. This is contributing to problems in some segments of the real estate market, with buyers unable to obtain the certification needed to obtain a mortgage.

On February 10 last year, the Department of Upgrading, Housing and Communities announced a government-backed PII program for competent fire safety professionals who undertake EWS-1 assessments to help resolve these problems. Under new arrangements announced on Tuesday 28 June, this scheme will be implemented by MGAM through insurance provided by SCOR UK, with Her Majesty’s Government providing reinsurance cover to SCOR.

The program, which is to be officially launched in September, will run for five years. After five years, insurers are expected to return to the market, which will then remove the requirement for a state-backed scheme.

Protection gap

Jason Anthony, CEO of MGAM, said: “When the government approached the market for a potential solution to this problem, MGAM recognized the significant protection gap in the market and immediately responded to the tender for administer a PI scheme for EWS-1 Assessments. We have worked closely with the Department of Leveling, Housing and Communities and SCOR to create a solution that will ultimately enable private markets to provide appropriate PI coverage to appraisers.

Romain Launay, Managing Director of Specialty Insurance at SCOR P&C, added: “SCOR is delighted to partner with MGAM and the Department of Leveling, Housing and Communities to provide insurance cover that will ensure that EWS-1 assessments can be performed correctly. and in a timely manner, thus enabling the purchase, sale or re-mortgage of homes in what is a difficult housing market. This initiative is in line with SCOR’s raison d’être, allowing us to reduce the protection gap for the ultimate benefit of society.

Decisive action

Lord Stephen Greenhalgh, Minister of State for Building and Fire Safety, said: “We are taking more decisive action than ever to tackle overly conservative lending and help identify fire risks. I am delighted that MGAM and SCOR are joining us in these efforts.

Lord Greenhalgh continued: “Our new compensation scheme will give EWS-1 assessors the confidence they need to exercise their professional judgment and take a more proportionate approach to their assessments. This is on top of the nearly £700,000 funding we have provided to train more assessors and I can’t wait to see the real impact of this effort.

Stuart Andrew, Minister for Housing, observed: “In order to offer EWS-1 PII to competent assessors, my department must accept unlimited contingent liability, with the Department of the Government Actuary making a best estimate of expected losses at around £100 million. The potential liability claimed is unlimited as there is no theoretical cap on the size of claims that could be made. However, the risk is limited by the number of buildings, as well as the number of EWS-1 ratings.

He went on to comment, “To further mitigate this risk, we will only offer PII coverage to accredited professionals who have the training, expertise and knowledge required to undertake the EWS-1 assessment. Additionally, completed EWS-1 assessments will undergo an audit process to ensure they are performed accurately and due process is followed.

According to Andrew, the cost of the plan – including expected losses – will be fully offset by premiums. “EWS-1 Assessors will be required to purchase PII policies for all EWS-1 Assessments they perform, with funds collected being accumulated and then used to pay any insurance claims successfully brought against Assessors. In this way, the scheme will operate on a fiscally neutral basis for the government.

training program

Commenting on this development on LinkedIn, Anthony Walker FRICS FSCSI MFireE (Director at Sircle and member of the RICS UK and Ireland World Regional Board) noted: “The delay in reaching this position has, in my view, led many investigators not to pursue the RICS External Wall Systems Assessment training program. Asking interviewers to spend more than 40 hours studying a qualification that had little value without PII was seen by many as a poor use of paid time.

Walker concluded: “Since the launch of the RICS training program in November 2020, I am led to believe that the total number of qualified people is less than 100. Hopefully this latest government news will provide practicing investigators with a greater level confidence when it comes to the value of their commitment to the EWS-1 course.

*An EWS-1 form is not a government or regulatory requirement, nor a building or life safety assessment. RICS has published guidance on the criteria to be used to determine if a building needs an EWS-1 form. This guidance was last updated on January 28 this year