Professional indemnity insurance for construction trades and other professions
There is a severe shortage of professional indemnity insurance (PII) for certain professions, most notably approved building inspectors, fire safety officers and others involved in the certification, design and construction of buildings, in particular high-rise residential buildings, for a variety of complex reasons. Where PII is available, the cost is significant.
As a result, certain businesses are having to close; work to implement recommendations from the Hackitt Report designed to reform the regulatory system, is being slowed; lenders are not lending; housebuilders and developers are losing sales; and the housing market is seizing up.
Added to that is the impact on individuals and families living in such buildings who are distressed by safety concerns and, in some cases, financially impacted through demands for remedial work to be carried out.
‘Run-off cover’ for PII (after the business has closed, or to protect professionals who have stopped practising or who have retired) can also be difficult, with the holding insurer usually agreeing terms. However, there have been examples when this has not been possible.
BIBA will work with Government and the industry to push for the following reforms:
- A review of building regulations so that they can be simplified, modernised and made more relevant to mitigating and controlling the risk of fire in high-rise residential buildings.
- Implementation of the Hackitt Report recommendations with regards to the division of responsibilities between the various parties involved in a building project and its ongoing certification. In this way the current undue onus placed on the approved inspector and fire safety officer will be better apportioned, making their PII risk more palatable to insurers.
- Continuation of the work with MHCLG to further review the insurance requirements and obligations placed on approved inspectors and fire safety officers so that these can be more closely matched to what the market can realistically offer.
- Simplification of the process whereby residents can apply to the £200 million Government fund to finance the replacement of unsafe aluminium composite material cladding (ACM) on high-rise residential properties where building owners have failed to do so.
- For a greater commitment to provide run-off cover from insurers when a business closes or a partner retires.
“It is difficult to cater for some professions in the current market. But if the changes BIBA are calling for are made, I am hopeful the broking sector can negotiate improved terms with the market.”
Partner, Group Chief Executive – Professional Risks, Griffiths & Armour
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