The insurance crisis in the construction sector continues to deepen....
....as more insurers announce their withdraw from the professional indemnity market, driving up premiums even further.
Architects, engineers, designers and surveyors are all seeing significant increases of up to 300% on their insurance costs and more cover restrictions, as market capacity continues to reduce.
What is causing the hard insurance market?
The insurance market has been highly competitive or 'soft' for the last 15 years. Over this long period, market rates dropped below profitable levels as insurers aggressively competed against each other for their share of the market, driving down premiums. Against this reduction, the claims being notified continued to grow in size and number, eventually becoming unsustainable to the point that a significant market adjustment was necessary - a 'hard' market!
It is widely reported that the insurance cost of the Grenfell tragedy and the fear of more major claims relating to cladding and other construction projects, was the trigger for the current market adjustment. As a result of their fears, many loss making insurers have withdrawn from the market, allowing those remaining insurers to apply more restrictive cover and increase their rates.
What can you do about it?
In reality, there is nothing you can do to change the force of a harder insurance market. But the insurance market moves in a cycle and it will soften again at some point in the future. In the meantime there's much a business can do to at least minimise the impact. Read our guide The Hard Insurance Market - Tips That Will Minimise The Premium You Pay.
This article is intended for information purposes only. Whilst all care has been taken to ensure the accuracy of the article it is not to be regarded as a substitute for specific advice. © 2019 Professional Indemnity Insurance Brokers Ltd