Professional Indemnity Insurance: a changing market
For the first time in well over a decade the professional indemnity market is hardening, which could mean you will be facing a significant increase in premiums at renewal time. The main driver of this change can be attributed to global economic factors, with a drop off in profits from the professional indemnity sector leading to a reduction in capacity. Historically these fluctuations in the market have been cyclical, and we can hope that balance will be restored in the coming years.

These wider economic factors have undoubtedly been aggravated by concerns about insuring the construction industry against the risks identified following the Grenfell Tower tragedy. There is a great deal of uncertainty in the insurance industry about potential exposure to liabilities in respect of fire-safety design and the specification of cladding, particularly in relation to high rise buildings. This has led to a number of insurance providers withdrawing from the market, and led those that remain wanting to limit their exposure through wider policy exclusions, increased excess levels and other limitations on cover.

What can be done?
There are steps you can take to at mitigate some of these unavoidable issues, and make yourself a more attractive customer for insurance providers.

• Establishing a good relationship with your insurer through a trusted broker is a good start, and how you present your practice as an ongoing risk to them is absolutely crucial.
• Be in a position to submit your renewal documents well in advance of renewal date so that you are able to answer any supplementary questions that may return.
• Make an effort to convince a potential insurer that you know where your risks and liabilities lie, and show that you have good risk-management procedures in place to mitigate them.
• It is vital that you are able to demonstrate your claims history.
• A practice with a good documented knowledge of its work and with solid quality assurance systems will be more attractive to an insurer that is worried about unknown liabilities in this time of uncertainty.
• While frequently moving insurers should be avoided for all of the reasons above, if you do not receive an offer you think is appropriate then be prepared to explore the market for alternative options. A list of insurance brokers is available here.

Your professional obligations
It is an expectation of the Architects Code that all architects have adequate and appropriate insurance to cover their liabilities. Increasing premiums do not diminish that responsibility, or the importance to both your practice and your clients that proper insurance is in place. While we can’t provide you with specific insurance advice in respect of policies, if you require any further general guidance you can visit our website or contact our Professional Standards team (professionalstandards@arb.org.uk / 020 7580 5861).