After years of low premiums and wide cover, recent negotiations with Professional Indemnity underwriters are showing definite signs of a hardening attitude towards renewal terms.
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A number of insurers have either reduced capacity or withdrawn from Design and Build Professional Indemnity entirely which is likely to lead to increased premiums from the remaining underwriters along with more restrictive terms.

This is the result of a number of factors, not least of which is design suitability of cladding following Grenfell. The current Lloyd’s report highlights Professional Indemnity as a loss making class of business and underwriters have also reported difficulties in being able to pass claims down the line to designers and consultants.

It is therefore essential that preparation for renewal takes place well in advance and that you work closely with your insurance broker to ensure that the information you provide when renewing gives insurance underwriters comfort around your ability to manage your risk and reduce the likelihood of claims. A full understanding of the insurance position of your sub-consultants and designers is essential to ensure that your contracts with them are back to back with the contract you hold between you and your client so that any claim may be passed on rather than sitting with you.

Starting the renewal process earlier will allow your insurance broker to gather the additional information that will be required going forward and will assist them in their bid to secure the most favourable terms. For example at Gallagher we may require to know as much about our clients cladding exposure as possible as it is likely that underwriters will request that restrictions be applied. Getting in touch earlier means we can find the right level of cover and the right underwriter to match your PI risk.

In summary, the hardening market will require contractors to take a strategic approach when renewing in 2019. Working with a specialist construction broker who holds strong relationships with insurers and specialist knowledge of the risks that face the sector has never been so essential.

To find out more please get in touch. We’re happy to discuss this issue and any other construction related risk or insurance enquiry you may have.