Professional Indemnity Insurance (PI) is emerging as a serious barrier to the recovery of the UK construction industry as it bounces back from Covid-19. Firms across the supply chain have seen increasing costs and more stringent curbs on policies. In some cases, this risks putting companies’ future in doubt.
In recent years firms have reported sharp increases in premiums for PI insurance, while also seeing stricter curbs on the levels of cover. Some firms have reported four-fold increases in policy costs, while others have said that they can no longer secure cover.
Before Christmas Spector magazine reported that specialist contractors were facing significant insurance premium increases, sometimes up to 800%, as insurers left the market and those remaining looking to improve margins in a hardening market.
Rudi Klein, a barrister and former chief executive of SEC Group, said:”Small firms in construction supply chains are being asked to double their PI cover from £10 million to £20 million. As they scrabble around to renew their policies, the only way to keep down premiums – which are already barely affordable – is to agree to huge excesses and exclusion of certain cover such as consequential losses.”
Construction Leadership Council (CLC) Professional Indemnity Insurance Group lead Samantha Peat said: “We are speaking to the UK Government and insurers to find ways to help businesses that could otherwise face an uncertain future due to the nature of their PI renewals.”
The CLC wants to support industry to tackle the issue. To do so it is calling on businesses from across construction to take part in a joint industry survey on the impact of PI insurance.
The CLC is asking for companies from across the industry to take part in a survey at https://www.surveymonkey.co.uk/r/CLCPII It asks companies to provide confidential feedback on the costs and policy exclusions that they have experienced when renewing their cover. The poll is entirely confidential, but firms are asked to indicate their type of business to help target any future support on those areas of greatest need.
Ms. Peat continued: “We want businesses from across the industry to give us their views – whether you are affected or not – to help us shape the way we prepare a response from the whole sector.”
The survey will be live until 12 March 2021. Industry-level details of the results will be published by Construction Leadership Council and will be used to inform ongoing work to support the sector.