The API is aware of NAB’s recent communication to its valuer panel firms as a result of NAB seeing an increase in valuer firm’s professional indemnity insurance (PII) policies containing development restrictions.

NAB has communicated to its panel valuer firms who have or will have on renewal, these types of development valuations restrictions in their PII policy, they are unable to accept these types of endorsements as being suitable for firms undertaking development valuations for mortgage reliance purposes and it will be unable to accept work from the firm and therefore, the firm will be removed from only development panels for NAB.

Please note that the development definition typically does not extend to a valuation where the proposed development involves one or two residential dwellings on the one Certificate of Title.

Despite the impact to our Member firms, this decision remains a commercial one over which the API has no influence. Whilst we have advocated for our Members to all PII stakeholders, we have not yet been able to find an alternative solution.

This decision is a further example of the ongoing PII crisis which is impacting our Members, and one which the API have been actively involved in trying to resolve. Whilst we remain determined to find a long-term solution to this issue, until such a solution is found we will continue to try and support Members through each new adaptation of our market sector to the situation.

Please ensure as part of your PII renewal process to talk to your broker. If they are unable to source an appropriate Australian-based insurance policy, then request your broker to investigate whether there are any overseas-based insurers that are a direct offshore foreign insurer (DOFI) under the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Act 2007. A DOFI is acceptable under the APIV Scheme Insurance requirements.

To address this current change, we recommend Members reach out to their PII brokers and discuss alternative PII coverage options. In the meantime, here is what the API is doing to address the broader PII market issue.

  • Following our recent meeting with the London Underwriters on 19 October, we have continued our discussions with them to better understand their risk requirements, especially for development valuations, in order to better advocate for Members in the PI market.
  • We are preparing a Valuation Guidance Paper on valuing development properties to provide greater consistency and clarity for members and the broader property industry with the aim of reducing the risk profile of these valuations.
  • We have scheduled meetings with the Insurance Council of Australia to advocate for Members and represent this deteriorating situation.

Whilst these initiatives are cumulatively working towards a long-term solution, we hope that they may also provide some short-term relief for firms affected by this change.

We are very happy to hear from you directly to share your PI experience, and should you have any specific queries. Alternatively, you can submit a question via our PI Insurance Hub.