From next month, agents accredited with the Singapore Accredited Estate Agencies (SAEA) must have valid professional indemnity (PI) insurance in order to renew their accreditation status. A minimum indemnity limit of $500,000 is recommended.
The move, besides helping companies to manage their risks, is also to boost public confidence.
"Consumers who approach PI-covered agencies feel safer, that this agency is not a fly-by-night company. And in the event I need legal recourse that would lead to financial compensation, I would be able to get it," said SAEA chief executive Tan Tee Khoon.
He noted how, in some cases, the plaintiff may find himself holding just a paper judgment when the other party cannot cough up the money.
Why the change now? Compulsory PI could be one aspect of a proposed regulatory framework for the industry that authorities are now looking at, said Dr Tan, and SAEA's new requirement for its members is in anticipation of just such a development.
One example of when PI comes in useful for the client: Some years ago, a buyer of a property was keen on converting it for a different business purpose.
His agent failed to find out that the property could not be used for other things, and ended up using his PI coverage to pay the penalty for forfeiting the purchase.
This instance was cited by Mr Michael Chew, chief executive of AVA Insurance Brokers, which was one insurer - the other being Royal & Sun Alliance Insurance - that SAEA worked with to offer PI options tailored especially for smaller real estate agencies.
Big estate agencies here already have indemnity cover, but hundreds of "boutique sized" firms lack such coverage due to their limited means, noted Dr Tan.
The proposed PI premiums AVA has worked out with SAEA, Mr Chew estimates, are about half the cost of coverage smaller estate agents are currently paying. More information will be given to SAEA's 400 accredited estate agencies.
In Singapore overall, Dr Tan reckons there are some 1,700 estate agencies, about 70 per cent of which have less than 50 staff - and of this group, four in 10 do not have PI coverage.
He believes making smaller agencies take up PI won't jack up costs for consumers, "as the industry is competitive".
Source: TODAY, 17 March 2010
