If the last year has shown us anything, it is that we simply don’t know what is around the corner, says Darci Edwards of Bridge Insurance Brokers Ltd.
Businesses all over the UK have changed, pivoted or sadly gone under in the wake of COVID – and without wanting to sound doom and gloom, we still can’t say for certain what is to come.
This is why professional indemnity (PI) is so important right now – as everybody needs to be prepared for the unexpected.
Construction – housebuilding and commercial development alike – are areas that have been hugely affected. Still reeling from the Grenfell tragedy, this industry is changing and uncertain.
Post -Grenfell, PI became the 2nd worst performing insurance in the UK as insurance teams struggled to cope with the cost of the losses, which were estimated at around £500 million in 2017 and 2018. It had a knock-on effect: other professions felt the impact as insurers try to make up losses from the construction fallout in different areas. Accountants, solicitors and the like found their premiums rising because of it, as well as surveyors, engineers, solicitors & architects.
The issue is that Grenfell was not unique – there could be hundreds of buildings still allegedly covered in illegal cladding. It goes without saying that it’s hugely important that this is addressed – the changes will need to be made to ensure buildings are safe. In addition, there could be many more materials that are currently approved for use, being incorporated into developments all over the UK, that could become illegal in the future. We just cannot predict this, so need to be prepared.
And then COVID. Having already seen price hikes, the construction industry then saw the pandemic cause vast amounts in claims losses. Developments ground to a halt, construction companies folded, investment portfolios were damaged. Nobody could have predicted the virus or the impact it would have – and is still having – on the economy.
This is why PI is so important for all businesses, but particularly the construction industry.
All too often, professionals in this sector have continued to use insurers and policies based on cost, bundling everything into one deal from one insurer and not thinking about the changing external situation. It’s understandable: they know their industry, they know what needs protecting as part of the planning and building process.
But the changing landscape of insurance post-Grenfell and post-COVID means that when it comes to renewal they could be hit with huge price hikes.
It’s vital that businesses don’t just stick with the status quo. People are already seeing increases in PI premiums and as the UK goes deeper into a recession, insurers will be paying more claims which will lead to increased premiums and insurers coming off risks. Getting a second opinion has never been more important, and a specialist PI team is best placed to provide that.
Developers need to be assured of the best deal and then go through that deal in finite detail to ensure that it is one that will protect them – for now and in the future. Whatever the future holds.