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No PI is an anomaly for our profession
Released 14 November 2011

In NSW, professional indemnity insurance is mandatory for a variety of professionals who practice in and around the property market. Solicitors, conveyancers, valuers, architects and tax agents – they all require professional indemnity insurance in order to practice their profession of choice.    

It is anomalous that there is no requirement for real estate professionals to maintain professional indemnity insurance.

It would come as a complete surprise to many consumers that real estate agents are not required to maintain professional indemnity insurance. That surprise would only be exacerbated should they discover that the NSW Parliament had always intended to provide consumers with protection, but successive Labor ministers – despite having the legislative authority to act – have failed to do so. 

Consumers at risk

Professional indemnity insurance was always intended to form an integral and significant part of the regulatory environment for the delivery of real estate services in NSW.

The failure of successive governments to activate the insurance component of the legislative architecture as contemplated by Parliament has exposed, and continues to expose, consumers to loss.

There are identifiable and inherent risks associated with the provision of the services of a real estate agent.

Those risks can, to some extent, be managed through a well-structured regulatory environment and the voluntary adoption of best practice policies and procedures.

However, the risks cannot always be totally eliminated and recipients of services may be exposed to loss and injury, which is why REINSW advocates for the introduction of mandatory professional indemnity insurance to respond to potential consumer loss.

The concept of utilising insurance as part of the overall management of risk is widely accepted and it is a complete anomaly that consumers are not afforded that protection when receiving services from a real estate agent.

The role of REINSW

REINSW seeks to promote the interests of members and the property sector and in doing so we have made a number of submissions over the years to the NSW Government.

Most recently, REINSW made a submission to the current Minister for Fair Trading, Anthony Roberts, promoting the introduction of mandatory professional indemnity insurance for real estate agents in NSW.

While we wait for the NSW Government to do what it promised to do when it introduced the Property, Stock and Business Agents Act back in 2002, REINSW has decided to take action.

From 1 July 2012, in order to be eligible to be an REINSW firm member, a real estate agency must have a minimum of $2 million in professional indemnity insurance cover.

A clear advantage

REINSW strongly believes that professional indemnity insurance should be mandatory for all real estate agents – and we know that most agents agree with us.

The vast majority of real estate agents voluntarily maintain professional indemnity insurance and are in a position to respond to consumer loss should it arise. It is unfair that those agents who elect not to maintain professional indemnity insurance can compete with those that do on a level playing field.

By mandating that professional indemnity insurance is a condition precedent to REINSW membership, members will have a clear point of distinction. Consumers will have the clear choice of dealing with an REINSW member who has professional indemnity insurance or a non-member who may not!