NEWS / ACE News / PI restrictions harming sector

ACE News

13 APR 2021


Issues with insurance preventing companies taking on projects.

ACE members were among the more than 1,000 respondents to a Construction Leadership Council (CLC) survey on Professional Indemnity Insurance (PI insurance) which revealed that significant cost increases and the introduction of new restrictions on cover are seriously impacting across the industry.

The results pointed to widespread incidence of companies having to change the type of work they do because of restrictions on cover, with a quarter losing jobs because of tough conditions and limitations being placed on them by insurance firms. Even though two thirds of respondents said that less than five percent of what they do is high-rise residential, almost one in three were unable to buy the cover they wanted or needed.

Other highlights from the CLC survey include:

  • Over a quarter of total survey respondents have lost jobs as a result of inadequate PI insurance.
  • Almost a quarter of total survey respondents have changed the nature of their work due to inadequate PI insurance.
  • Almost half of respondents had been declined insurance by three insurers or more
  • Two thirds of respondents are carrying a claim excess imposed upon them by their insurers
  • Premiums have increased nearly four-fold at the last renewal, having doubled the year before; the average rate is 4% of turnover but one in five who gave figures are paying more than 5% of their turnover for their PI insurance

Commenting on the results, Director of Membership and Business Engagement at ACE, Darrell Matthews, said: “The results tally with the anecdotal evidence I have been hearing over the last year from some of our members. PI insurance has changed dramatically and it is seriously impacting on some of our members’ ability to successfully bid for, and undertake, work.”

“These cross-industry findings will provide a firm basis for evidence-based engagement with Government on this issue. Whether through ACE or through a broader industry coalition via the CLC, we will continue to champion the issue wherever possible.”

Earlier this year, ACE announced that it had formed a strategic partnership with broker Griffiths & Armour with the ultimate aim of improving access to the PI insurance market for members. The affiliate has been working with ACE for over 75 years and as such has an innate understanding of the industry and our members. 

Graeme Tinney, Griffiths & Armour Professional Risks Director, said: “To some extent, the findings reflect what we already know about the PI market and the challenges many firms are now facing.  The results also echo the feedback from the survey undertaken by the British Insurance Brokers Association (BIBA) during 2020.”

"In announcing our strategic partnership with ACE, we talked about a 'storm raging' in the PI insurance market.  As brokers, we cannot control that storm, but we can help firms to navigate the difficult road ahead. With that in mind, we have prepared some guidance to assist ACE members in preparing for their PI insurance renewal, mindful that it may be their most difficult and significant business negotiation in 2021."

"Our clients have been better protected from the extremes of the market and we have been able to come to the assistance of many firms but time has been a critical component.  In managing the renewal of PI insurance, we need to: understand the particular requirements of a firm, prepare a comprehensive submission for insurers, explore the alternatives to establish an engagement plan, and set-out the reasons for our recommendations."

Tinney added, "If firms have concerns regarding their existing PI arrangements, Griffiths & Armour would be more than happy to try to assist but the advice is to not wait until renewal is upon you, do get in touch early and let’s make sure we have sufficient time to help you achieve the best possible outcome."

Once logged in, ACE members can download the exclusive G&A guidance note below.


G&A - Preparing for PI Insurance renewal (2021)

April 2021

Guidance prepared for members by affiliate Griffiths & Armour on 2021 renewals.