Climate change: No guarantee Flood Re will be renewed in 23 years’ time
Conveyancers must make it “very clear” to clients whether or not they are taking on liability in checking for climate change issues, a director at a major indemnity insurer has warned.
Edward Donne, director at Howden Insurance Brokers, said underwriters would “raise their eyebrows at conveyancers taking on more liability” and he hoped they charged for the work.
“Whatever decision you make, make it very clear, so the client understands whether you are outsourcing or whether you are taking no responsibility whatsoever. That is what your underwriter wants to see.”
The practice note, published last month, advises solicitors to tell their clients in property transactions about the potential liability they face from climate risks.
Conveyancers should also explain to clients that one way to find out about climate risks was to commission a climate risk search and record their client’s decision.
Speaking in a session on the Law Society’s climate change practice note at the annual Bold Legal Group conveyancing conference in London, Mr Donne said solicitors should be clear in their letters of engagement what they would and would not do.
He went on: “I’m working on the principle that if you do it, you outsource it. It might be sensible to look at the insurance that the outsourcer has, to have some recourse if things go wrong.”
While conveyancers had “the strongest insurance policies in the world… the same is not true of others around you” – meaning “as ever” it would end up being the conveyancer’s cover that had to respond to claims.
When it came to climate change, “the insurance industry cannot pay for it all”, Mr Donne said.
Flood Re was an “amazing thing” – a joint venture between the government and the insurance industry to provide affordable insurance to owners of homes at risk of flooding – but the contract had 23 years to run.
So if you obtained a 25-year mortgage, there was no guarantee that Flood Re would be renewed.
Catherine Shiers, customer engagement director at search provider Groundsure, said its climate risk reports had been used in a million conveyancing transactions, and around 80% did not identify any risk.
Stephen Sykes, head of climate at Capital Law in Cardiff, said he estimated that 80% of the residential property sector had taken up climate risk searches, a figure that was probably lower for commercial property.
The Law Society practice note “marks a shift” as to where climate change sat as a risk. “We are dealing with an issue that is not abstract, it’s real.”
Mr Sykes said the practice note was “not trying to turn us into climate scientists”, and was defensive in helping solicitors judge whether a risk was material or not, and whether or not they had done the right thing.
He added that probably the “best thing” solicitors could do with the practice note was implement the check list.
