INSURERS are braced for a last-minute rush of professional negligence claims relating to the financial crisis as the six year window to submit cases begins to close.
Most negligence claims have to be filed within six years of the alleged mistake taking place, meaning time is running out for organisations and individuals who believe professionals overvalued assets or gave bad advice just before the economy collapsed.
One law firm warns many of the claims will be opportunistic attempts to cash in after deals made in the last days of the boom resulted in substantial losses when stock markets and property prices plummeted.
“One of the problems with these claims is that they are often launched on the basis that the meltdown in 2007 and 2008 now looks so obvious in hindsight, which misleads claimants into thinking they have a strong case,” said Paul Castellani of commercial law firm RPC.
“However, the courts will ask whether the fall in asset values was so clear-cut at the time. On that basis many of these claims will be unlikely to succeed. But even unsuccessful claims cost a lot of money for professional indemnity insurers to defend.”
Surveyors have born the brunt of credit crunch related negligence claims after being targeted by lenders who provided mortgages to buy properties that have since collapsed in value. Commercial property valuations have come under particular scrutiny after many retailers struggled to pay rents agreed during years of economic growth.