It’s time to push reset on our industry on the issues surrounding professional indemnity insurance
Professional indemnity insurance is on most practice owners’ minds. After a decade or so of relatively low premiums, Grenfell and its consequent Hackitt review, along with other construction disasters such as the collapses in Scottish schools, have contributed to the significant hardening of the marketplace. Other factors are also at play, including PII performing badly compared with other areas of insurance, the unreasonableness of bespoke appointment contracts for architects and that certain architects are prepared to sign them.
Architects are valued for their PI insurance, with inappropriately high levels of cover often stipulated by client representatives and related warranties, and with architects present at the project’s end they are vulnerable to a contribution to a claim. In 2019 James Burgoyne, in Defining Contemporary Professionalism, confirmed that two-thirds of architects’ PI claims are ‘sector or situational issues’ which means ‘essentially being in wrong place at the wrong time’ and that ‘a firm needs multiple risk management strategies as a series of lines of defence’.
The legacy of numerous potentially unsafe high rise, and not so high rise, high risk residential buildings looms over the whole construction industry and property market, freezing sales and worrying insurers about retrospective claims.
Some suggest it has remained relatively easy for practices to gain PI insurance. Such a stance neglects the near market failure situation with some insurers having left the market altogether and the rest offering limited cover at a cost, almost all with broad exclusions on fire safety issues.
Although the appetite in the insurance market for architects’ PII has got to the point where even a clean claims history and excellent risk management processes do not shield a practice from premium increases and broad exclusions of cover, chartered architects are changing culture and can look forward to being able to better demonstrate competence to provide assurance to clients and the public. In 2019 the RIBA introduced the new online CPD recording platform and in August 2020 The Way Ahead set out how academia and practice must come together to facilitate lifelong learning, mandatory competencies, career trajectories and increasing levels of expertise. The RIBA Academy is live, with online CPD and support, soon, for schools of architecture to address carbon literacy, professionalism, public health and life safety. The new 2020 RIBA governance includes a new standards committee with a remit across education and validation, codes of conduct and competence.
Even a clean history and excellent risk management do not shield a practice from PII premium increases and broad exclusions of cover
Over the last month I have presented The Way Ahead to numerous RIBA committees, regional councils and nations. Even in these challenging economic times everyone I have spoken to appreciates and agrees with the direction of travel and wants to be involved.
There is a significant change within the RIBA and its membership; we are stepping up, and government needs to step in, to resolve the legacy of ‘deem to satisfy’ construction by providing industry support funding, as well as underwriting the remediation of unsafe residential buildings and by pressing reset on our industry – on appointment and fees, on procurement of the design team and construction, on competencies of all involved, on reasonable apportioning of risk, on clear roles and responsibilities – creating the conditions in which architects, the only regulated profession in the construction industry, can truly deliver for everyone.
RIBA chartered members are required to hold professional indemnity insurance even where accepting a fire safety exclusion is unavoidable. Detailed guidance is available in RIBA Practice Note 1 Rev A