The Professional Indemnity Crisis Impacting the UK Construction Sector

10th March 2021

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Over the past 18-24 months there has been a significant shift in the cost of quality PI cover available to businesses working in the construction industry.  Many businesses are either experiencing a significant increase in price when renewing cover or are struggling to find insurance policies altogether.

Recent years have seen sharp increases in premiums for professional indemnity (PI) insurance and stricter curbs on the levels of cover have been introduced. Some firms have reported four-fold increases in PI policies, while others have said that they can no longer find cover.

According to the Construction Leadership Council (CLC), the rise in costs is the result of a number of factors, including a response to historically high claims from the construction industry, as well as a ‘cyclical hardening’ of the insurance market.

In an article in Building, Professor Rudi Klein, former chief executive of the Specialist Engineering Contractors’ Group, stated that “the problems we are experiencing with PI are the result of a traditional construction/infrastructure procurement process driven by a lowest price culture – and the need to effect wholesale risk transfer.”

As a result of the crisis facing the industry, the CLC has launched a confidential survey, closing later this week, to identify the key issues for the industry and uncover what is causing the most difficulty. The survey asks companies to provide confidential feedback on the costs and policy exclusions that they have experienced when renewing their cover.

The CLC plans to take the results of this poll to the UK Government and leading insurers in an attempt to address the issues and come up with a solution for an industry that has already been hit hard by the pandemic.

Take the CLC Professional Indemnity survey here.