Policy paper

EWS1 Professional Indemnity Insurance Scheme: Departmental Minute from MHCLG

Published 4 April 2025

Applies to England

© Crown copyright 2025

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at https://www.gov.uk/government/publications/ews1-professional-indemnity-insurance-scheme-departmental-minute-from-mhclg/ews1-professional-indemnity-insurance-scheme-departmental-minute-from-mhclg

Departmental Minute in relation to contingent liability arising from the EWS1 Professional Indemnity Insurance Scheme

Presented to Parliament by Minister Alex Norris by Command of His Majesty

  1. This Minute provides Parliament with an update to a contingent liability, arising from the EWS1 Professional Indemnity Insurance Scheme. It was introduced in a previous departmental Minute, and this Minute gives particulars of the changes and explains the circumstances for the change.

  2. On 27 June 2022, the Minister of State for Housing published a Written Ministerial Statement notifying Parliament of an unlimited contingent liability for the External Wall System (EWS1) fire safety assessment professional indemnity insurance (PII) scheme, with the Government Actuary’s Department (GAD) making a best estimate of expected losses as circa £100 million. The scheme launched in September 2022 for competent fire safety professionals undertaking EWS1 assessments. The scheme aimed to enable competent professionals to access the indemnity cover they need to undertake external wall assessments, providing protections necessary so that EWS1 assessments could continue and unblock delays in lending decisions.

  3. HMG entered into commercial arrangements with an insurer who administers policies and handles claims on government’s behalf. HMG acts as the reinsurer of all liabilities of the Insurer in respect of policies written by the Insurer in relation to the EWS1.

  4. Policies sold under the scheme to date will continue to be insured under the original terms. Due to improving market conditions, fewer policies were sold than anticipated. The maximum possible losses from claims arising is £70 million, which may decline further if policies are cancelled.   The policies have a 15-year term, meaning that claims are possible until 2038. The risk is limited by the number of buildings, and number of EWS1 assessments. To further mitigate this risk, we only offered professional indemnity insurance cover for accredited professionals who have the requisite training, expertise and knowledge to undertake the EWS1 assessment. In addition, completed EWS1 assessments insured under the government scheme are subject to an audit process to ensure they are being completed in line with the BSI PAS 9980 methodology.

  5. The scheme closed on 30 October 2023. Departmental research showed that assessors can access suitable insurance from the open market at a competitive premium and with a wider scope of coverage. The market has responded to the protection gap the government was looking to address, which removes the requirement for the government backed scheme. Continuing with the scheme would no longer be a good use of public funds.

  6. Government action has helped to get the market moving again and address this issue. The relevance of EWS1 forms is declining as wider government interventions have taken effect that support mortgage lenders to reduce their reliance on EWS1 forms and instead use other forms of documentation to support commercial lending decisions. The changes we have made have helped improve access to cover across the Professional Indemnity Insurance market.

  7. The cost of the scheme, including the expected losses, was intended to be offset in full through premiums. Due to the low number of policies sold, this has not been possible and as such if the liability is called, provision for any payment beyond income received from premiums will be sought through the normal Supply procedure. Due to the low number of sales, our exposure is also reduced. HMG will continue to monitor the scheme and any claims or changes to this contingent liability on a regular basis. Parliament will be notified of any such changes.

  8. The Treasury approved the proposal in principle to launch the scheme and has been informed of its closure. If a member wishes to raise a Question on this proposal, the Department will respond to any such requests.

Ministry of Housing, Communities and Local Government
20 March 2025

Back to top