Time Bomb Imminent for PI Insurance

[numbersrule]

Our existing Insurers ( several years ) are going to withdraw from insuring companies in our market sub-sector.

This is the latest set back after several years of difficult market conditions since Grenfell ( even though we have nothing to do with cladding whatsoever, and we have to sign a statement to that effect every year ).

So our options are narrowing and so far the 3 alternative insurers selected by our brokers still have not offered terms for the original renewal date of this Sunday. One of them has declined because they have also lost their appetite.

Our brokers have therefore arranged a one month extension with our existing insurers, I have made enquiries and signed to say there are no known circumstances or claims of which we are aware, and the existing insurers have agreed to the extension.

So this buys another month to obtain terms. I submitted our proposal at the end of July.

I know we do operate in a somewhat risky space, but as I always say, it's only really risky if you get things wrong.

No claims ever lodged against us.

I suppose this serves me right for once telling a Structural Engineer that we did not have the appetite for the type of risk he needed help with. Now we need help with our insurances that may have come back to bite us where it hurts.

Last year, at renewal time, when there was similar uncertainty, we approached an alternative broker and they advised that our best option was to stick with existing.

Are other industries facing similar issues?

Thanks for reading this! Just wish to start a general discussion.

 

[Frank the Insurance guy]

Hi @Ground Investigator

You are clearly in the construction sector, although not sure what part.

As you know, Professional Indemnity Insurance for the construction sector has been tough over the last few years - even if you are not involved in cladding, fire safety or basements!

Gone are the days of "cheap" insurance. Most of those insurers/providers who have withdrawn from your sector have done so because the premiums charged were too low and therefore not profitable, which is not sustainable in the long term.

I see you are waiting for quotes from the insurers selected by your broker - I assume these insurers are within the London/Lloyds market, which can unfortunately take time.

In the current climate the London/Lloyds market may be your best bet!

Have you spoken to other brokers for alternatives and advice?

If you would like to have a chat, feel free to give me a call (number below).

Good luck.

 

[WaveJumper]

I apologise in advance for this post as its a bit of a side issue but it makes me think this is the reason insurance companies are retreating in double quick time.

A brand new luxury apartment block went up close to where I own a property all very nice literally only finished end of last year. Happened to visit my own apartment the other month when a neighbour asked me if I had seen the scaffolding up around the new build. Apparently they now stripping off five floors of cladding as its not the right stuff. Who the hell is designing, checking these builds, where is building control in all this. No wonder insurance companies are pulling up the draw bridges.

Again sorry rant over but I just couldn't believe this was still happening long after Grenfell

 

[UKSBD]

Who the hell is designing, checking these builds, where is building control in all this.

Building control are pressurised by devellopers, local authorities, architects, builders, owners, etc. to sign off projects.

The guy doing the sign off is probably the lowest paid in the chain, if he doesn't sign off, he probably won't last long in the job, if he does sign something off and anything goes wrong, all the others try to pass the buck to him.

 

[Newchodge]

Building control are pressurised by devellopers, local authorities, architects, builders, owners, etc. to sign off projects.

The guy doing the sign off is probably the lowest paid in the chain, if he doesn't sign off, he probably won't last long in the job, if he does sign something off and anything goes wrong, all the others try to pass the buck to him.

Building control used to be run by the local authority. I forget when it was decided to open it up to the market, but it was years ago, and probably under Labour. If I recall correctly a developer can use their own employees for building control. With predictable results.

 

[UKSBD]

Building control used to be run by the local authority.

The local authority ones are pressurised just as much as the independent ones.

Edit to add: probably more so because the local authority who wants that project signed off are also his employers.

 

[Newchodge]

The local authority ones are pressurised just as much as the independent ones.

Edit to add: probably more so because the local authority who wants that project signed off are also his employers.

But when the local authority building control inspectors were the only ones the developers had less power.

 

[numbersrule]

In the current climate the London/Lloyds market may be your best bet!

Have you spoken to other brokers for alternatives and advice?

If you would like to have a chat, feel free to give me a call (number below).

Good luck.

Thank you Frank
Yes, today I have taken advice from another broker and they are now going out to one more insurer.
Thanks for the offer and I'll phone tomorrow!

 

[numbersrule]

I apologise in advance for this post as its a bit of a side issue but it makes me think this is the reason insurance companies are retreating in double quick time.

A brand new luxury apartment block went up close to where I own a property all very nice literally only finished end of last year. Happened to visit my own apartment the other month when a neighbour asked me if I had seen the scaffolding up around the new build. Apparently they now stripping off five floors of cladding as its not the right stuff. Who the hell is designing, checking these builds, where is building control in all this. No wonder insurance companies are pulling up the draw bridges.

Again sorry rant over but I just couldn't believe this was still happening long after Grenfell

Hi WaveJumper!
No need to apologise for a perfectly justifiable post!

A significant contributory factor identified in the Grenfell enquiry was the long term deregulation ( multiple uk governments ). One aspect of this is the partial privatisation of Building Control as outlined in many other posts.

Private Building Control Officers do not normally have Enforcement Powers and have to apply to bring in Local Authority Building Control if they find a problem which must be put right. This adds another layer of complexity to an already complex industry.

The multi disciplinary nature of construction means that it is often difficult to determine the cause when problems arise.
Particularly in the pressurised environment of a Connstruction Project.

There are indeed some present day issues which weren't always factors, but in reality the Construction Process has always been relatively higher risk with regular unexpected events.

However, as you have identified, there may sometimes be scenarios where there are problems which really should have been prevented.

 

[WaveJumper]

Do you think the ultimate responsibility should lie with the architects. I say this as in my other life in the commercial property sector and being involved in some quite major construction projects it was always the architects who were insisting on this that other other requirements regarding materials, from wall tremens, glazing and what type of marble was going on the floor etc.

Perhaps it does, but as you say the whole system of "approvals" in particular with councils was if they could "sub' out any responsibility to a third party they did, and on the odd occasions they had their own people involved and sitting around the table I seem to remember all the focus was on getting the property owners contribution for some new heat pumps they needed for a gym complex the council had built rather than the 50m project at hand.

As you probably guessed I do not have a very high regard for local councils especially in getting anything done

 

[UKSBD]

Do you think the ultimate responsibility should lie with the architects.

Absolutely, but they always have it in their terms that they pass the buck.

I have a business related to accessibility, the regulations have been in for 20 years now but still get calls from people who get to completion and then discover no one has allowed for disabled access, or just half heartedly allowed for it, assuming it would just get approved anyway.

10+ years ago, building control turned a blind eye to it, or let things go a bit for the completion certificate, nowadays they are a lot stricter, the develloper/builder gets it in the neck where as really the arcitect should have allowed for it when drawing the plans.

Perhaps it does, but as you say the whole system of "approvals" in particular with councils was if they could "sub' out any responsibility to a third party they did, and on the odd occasions they had their own people involved and sitting around the table I seem to remember all the focus was on getting the property owners contribution for some new heat pumps they needed for a gym complex the council had built rather than the 50m project at hand.

The thing is, everyone wants the projects completed (including local authority).
As long as there is paperwork showing things are compliant they don't care.

All they really want is someone other than them to have their signature on a form

If this means subbing ity out to a 3rd party or pressurising one little guy at building control to put his signature on a form, then so be it.

If that little guy right at the bottom refuses to (which they appear to be doing a lot more now) that's when the insurance companies get hit for the rectifying work.

 

[numbersrule]

But when the local authority building control inspectors were the only ones the developers had less power.

My understanding is that gradual / partial deregulation alongside increasing influence of developers was motivated by what was, and still is, seen as insufficient housing stock. That being a political motivation.

 

[Newchodge]

Absolutely, but they always have it in their terms that they pass the buck.

I am not convinced that would be valid if they had been negligent.

 

[numbersrule]

Absolutely, but they always have it in their terms that they pass the buck.

I have a business related to accessibility, the regulations have been in for 20 years now but still get calls from people who get to completion and then discover no one has allowed for disabled access, or just half heartedly allowed for it, assuming it would just get approved anyway.

10+ years ago, building control turned a blind eye to it, or let things go a bit for the completion certificate, nowadays they are a lot stricter, the develloper/builder gets it in the neck where as really the arcitect should have allowed for it when drawing the plans.

I see your logic here, and that may be the case in some specific situations, but remember, construction is more complex generally, and on some Projects, the Main Contractor can be the entity ultimately responsible for example in a Design and Build scheme. In some cases an Architect may create a Project Design which is passed on to the D&B Team ( e.g. Main Contractor and Structural Engineer / Design Manager ) and then individual elements of the design may change depending on the site circumstances / conditions and the Architect may have no control over this nor therefore accept any responsibility.

 

[numbersrule]

The original renewal date has now passed and we are into a one month extension.
One insurer has offered good terms generally, but unfortunately there is an exclusion in the standard policy wording which we cannot accept. So the brokers have gone back to the prospective insurers to ask them if the exclusion can be taken out. Currently waiting for answer.
I see there is another separate thread today on the subject of PI Insurance difficulties / shifting terms.

 

[numbersrule]

The exclusion has now been resolved. The broker had provided an incorrect off the shelf policy wording. Now we have the correct policy wording there is no problematic exclusion in there and so we will be proceeding with insurers kind offer. We've even ended up with improved terms on an 'Any One Claim' basis. So all's well that ends well.