Our two-tier rate approach allows us to keep rates as competitive as possible. As a result of the dramatic shifts in the real estate market, the majority of claims we receive stem from appraisals performed from 2005 to mid 2008.
The economic recession and real estate market conditions have triggered an increase in the number of claims made and the severity of claims made against appraisers and other professions serving the real estate industry. In addition, Appraisers E&O insurance has typically been subject to what is known as a very short “tail” period; on an active Appraisers E&O policy we’d expect to see claims derive from appraisals performed in the prior two to three year period. So, on a Appraisers E&O policy written or renewed in 2011, we would expect to see claims on appraisals performed in 2010, 2009 and to a lesser extent 2008.This has changed drastically, in 2011 the overwhelming majority of claims we see arise out of appraisals performed during the real estate boom years of 2005, 2006, 2007 and to some extent 2008. We are still seeing the fallout from the housing and mortgage crisis.
We have implemented a rating structure that takes into account the retroactive date or the prior acts coverage afforded under a policy. We are still a market for appraisers with retroactive dates prior to August 1, 2008, however we must charge a premium that is commensurate with the above average exposure presented by appraisals performed during the real estate boom years. In many states our rates have either remained the same or decreased for appraisers with a retroactive date of August 1, 2008 or later, as we see fewer claims derived from appraisal work performed mid-2008 and later.
We have also taken steps to improve coverage afforded under our program including doing away with the deductible ($0 deductible applies to all Insureds) and the addition of subpoena assistance and data privacy breach coverage.