4 Proposed solution

4.1 Following discussions with stakeholders, including insurers, we propose to define the minimum level of cover firms must take when going into run-off as:

  • six years in duration;
  • fully prepaid;
  • on a claims-made basis (i.e. cover period overlaps with when the claim is made, not when the work is completed); and
  • £2 million aggregate limit, £500,000 of which to be ringfenced for consumer claims and claims by corporate entities with an annual turnover of less than £2 million.4 In line with the policies of other professions, we have also decided to cap individual claims to a maximum limit of £500,000.5

4.2 RICS will still require firms to ensure they have adequate and appropriate run-off cover reflecting the size, nature and services offered by the firm, but the above will be the minimum requirement to comply with the Regulatory Board's policy.

4.3 The firm may continue to obtain run-off from the open market of approved insurers, as is currently the case, or they may approach the ARP.

4.4 The package offered by the ARP will also be in the above terms. No other terms will be offered by the ARP, although terms that exceed those specified may be offered via the open market. Should the terms offered not fulfil the characteristics of 'adequate and appropriate' cover, the firm will need to seek cover that satisfies this requirement elsewhere.