Compulsory PI coverage for property agents set to boost public confidence

Homebuyers now have a greater degree of assurance of recovering at least part of their losses should their property agent give them poor advice, lie to them or fail to do their due diligence.

Starting next month, agents accredited with the Singapore Accredited Estate Agencies (SAEA) must obtain a valid professional indemnity (PI) insurance to renew their accreditation status. A minimum $500,000 indemnity limit is recommended.

Aside from helping companies to manage their risks, such a move is also intended 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 Tan Tee Khoon, chief executive officer of SAEA.

He noted how, in some instances, the complainant may find himself holding just a paper judgment when the other party cannot shell out the money.

According to Dr. Tan, compulsory PI could be one aspect of a proposed regulatory framework for the industry that authorities are now considering, and the new requirement of SAEA for its members.

He also noted that large property agencies in the country already have indemnity cover, but many "boutique sized" firms lack such coverage because of their limited means.

Mr. Chew estimates that the proposed PI premiums AVA has worked out with SAEA are about half the cost of coverage that smaller property agents are currently paying.

In Singapore, Dr. Tan reckons that there are around 1,700 property agencies, and about 70 percent of which have less than 50 staff. Of this group, four in 10 have no PI coverage.

He believes that by obliging smaller agencies to obtain PI won't prop up costs for consumers, "as the industry is competitive".