The failure of successive state governments to make indemnity insurance compulsory for real estate agents in NSW, has prompted the Real Estate Institute of NSW (REINSW) to introduce a mandatory coverage requirement for its members from July 1 next year.
“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,” the REINSW said in a statement on its website today.
“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.”
The REINSW said it has made a number of submissions to the NSW government about the subject, including one to the current Minister for Fair Trading, Anthony Roberts.
“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.”
While the REINSW acknowledged that most real estate agents voluntarily maintain professional indemnity insurance, it said “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.”
“It would come as a complete surprise to many consumers that real estate agents are not required to maintain professional indemnity insurance,” the REINSW continued.
“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.”