Professional indemnity insurance

2021 has not brought any relief to the pressure the professional indemnity insurance market is facing, which is causing huge difficulties to the whole construction industry. While we continue to liaise with government, professional bodies and the insurance industry to help resolve these deep-rooted problems, there are a number of steps you can take to improve your position when renewing your cover:

1) Prepare early

Gone are the days where you can fill in your proposal form three weeks in advance of renewal and expect a quick decision or extension. Insurers are under considerable pressure as to where they place their risks and those decisions are not helped by the current restrictions. You should be thinking about renewal months in advance of your insurance expiring; it may be helpful to ask your broker to arrange a meeting with underwriters so you can talk to potential insurers about your business.

2) Present your business positively

Show insurers that you are a good risk worth taking. A practice that can demonstrate that it knows its historic liabilities and has good quality assurance systems in place is going to find it easier to secure good quality cover.

3) Review your contractual terms

Consider taking advice on the appropriateness of your contractual terms and as far as it is practicable, resist agreeing to terms which leave you with a disproportionate share of the risk on a project. It is important that you are not accepting liability for sub-consultants via your PI policy – you should insist that they have their own adequate insurance in place. Insurers will also be assured by architects who have Proportionate Liability Agreements in place with their clients.

4) Test the market

While you should be cautious before changing insurer purely for the benefit of cheaper premiums, you should ask your broker to consider other ways of placing your risk. Consider ring-fencing specific projects which, if they were to result in a claim, could damage your firms risk profile in respect of other clients.  You should also consider speaking to other brokers to see if there are other markets available better suited to your needs, as different brokers are likely to have access to different insurers.

You can find further information about Personal Indemnity Insurance on our website, including our PII guidance and a list of brokers, here.

If you’d like further advice on this subject, or if there are other topics you’d like us to cover, contact us at professionalstandards@arb.org.uk or on +44 (0) 207 580 5861 and we will be happy to help.