Over the last ten years Professional Indemnity premiums for the traditional and emerging professions have been pretty stable. This has also been the case for the ‘design and build’ construction sector. The market has been characterised by a benign claims climate and a ready supply of Insurers prepared to offer terms at generally competitive rates, even to businesses that had suffered claims. However, in the last 6 months there have been warnings that the market is turning and not for the better!
The first signs of market change started to show with the solicitors Professional Indemnity Insurance season. This sector is unusual in that for the majority of the legal professions, Professional Indemnity falls due for renewal in October. During the Summer, a number of major insurers withdrew from the market, as a result of worsening claims and increased awards, and this caused something of a price shock. This situation was further exacerbated by the Grenfell Fire Disaster. Following the terrible events of July 2017 the investigation has started to raise questions about the professional advisers involved in the construction and refurbishment of the building. Queries have been raised in relation to professional standards and the duty of care owed by companies involved in the construction and related sectors and this has resulted in a number of significant notifications being made to insurers. As a corollary to this, a number of organisations have started retrospective reviews of their own property portfolios which has lead to an additional spate of insurance notifications against construction related professionals.
To say that this has destabilised insurers is something of an understatement. Premiums have increased, restrictive conditions are being applied and levels of cover that have previously been agreed have been reduced. Policies that previously applied a limit of indemnity per claim are now being limited to providing the limit of indemnity on an aggregate basis which may be in breach of contractual conditions or possibly collateral warranties.
With this background in mind it is essential that your Professional Indemnity cover is reviewed early and you ensure that you are speaking with a specialist broker, such as ProAktive, who can ensure that you receive the correct level of technical advice and support.
This cloud does have a silver lining in that cover for emerging professions is still widely available at sensible rates!
By Andy Morley – Group Managing Director