Professional Indemnity insurance is an important part of many professionals' business risk management. We asked successful professionals in key sectors about their business, and where PI fits into the work they do.
Neil Sutherland, estate agent
What's your background?
I've been in the estate agency business for more than 20 years and set up my own company, Neil Sutherland Estate Agents, in 2004. We deal in both residential sales and lettings for a wide range of properties in the Brighton and Hove area.
What kind of risks do you have to think about in the day-to-day running of your business?
Firstly, the safety of our staff who take clients out on viewings – their security and wellbeing is paramount. We also have to ensure that our clients are not in any danger while viewing a property as well as making sure the house-hunting process goes as smoothly as possible for them. Talking to clients to get a clear understanding of what they need as well as what they want is key to providing the best possible service.
When you first set up your business, did you see Professional Indemnity insurance as an integral part of set up costs or did you buy it later?
We didn't invest in PI from the outset as I didn't think we needed it. It was our accountant who advised us that it would be beneficial, and also talking to other professionals in the business made me realise it was worth investing. I don't feel we are at any great risk, but as Britain is becoming more like America with people more likely to sue, I suppose it's unfortunately just the way of the world. I took out the policy 18 months after setting up the business.
What are the key benefits of PI cover for estate agents?
Since 2007, when the OEA - the ombudsman scheme for estate agents - came in, it has been mandatory for estate agents to have PI cover. It protects agents and clients in cases of misrepresentation and mis-selling of a property.
What services that you provide are most open to risk?
We have to ensure that clients are not mislead or given incorrect information about a property. The terms of the PMA (Property Misrepresentation Act) can be very ambiguous and each trading standards organisation for the various regions makes their own interpretation of it. However, it's about treating clients as you'd like to be treated yourself. For example, if an estate agent had a client coming down from Scotland to view a property and they believed it has been described incorrectly they could make a claim through local trading standards for loss of income and essentially the waste of their time.
What are your customers' greatest concerns, and how does PI help protect your reputation?
Unlike financial advisors, we don't advertise the fact that we have it and we have never been asked by clients if we have cover. It is a legal requirement that is in place and it's a case of following the rules. We've built our reputation on the fact that we provide a first-class and honest service. The fact they we have a lot of repeat business proves that we are getting it right! We've never had to make a claim.
What's the most interesting case of a negligence claim or horror story you've heard of in your industry?
There are agents out there who operate outside the boundaries and the worst cases I hear about are usually to do with agents underselling properties on behalf of a buyer to get a back-hander or making up bogus offers in order to manipulate a sale. We need tighter laws to prevent horror stories like these.
