As a business owner, feeling protected by your insurer is right up your list of things that help you sleep at night, but recently that privilege is becoming harder to obtain.
Over the past 18 months PII premiums have soared in the architecture sector, with one major survey showing practices being quoted new premium prices that are, on average, three times higher than the cost of a previous policy renewal. Further to that, not all practices had comprehensive insurance, with 57 per cent accepting exclusions, particularly relating to fire safety. With numerous insurers leaving the market altogether many practices are struggling to afford or even obtain the appropriate protection, with the subsequent impact on their ability to win projects.
Contractors are becoming more aware that their supply chain’s lack of cover increases their own risk, and as a result are more selective than ever (and rightly so), but what are business owners to do when premiums are so high and full exclusions are the only way to reduce them (albeit slightly)?
Answers are being sought by RIBA, led by ex-RIBA president Marco Goldschmied. The idea is to set up a mutual insurance fund to provide cheaper PII to practices, with members clubbing together to mutually insure one another. There would also be a team of in-house lawyers, who could advise members free of charge when claims are made against them.
RIBA chair Jack Pringle confirmed the institute had spoken to Goldschmied, saying: “We are considering what further actions we can take to provide support to our members. These could include operating a mutual fund, developing our existing brokerage arrangements and expanding our existing legal support.”
This is great news for the smaller practices in particular, with Goldschmied pointing out the disadvantages in the current market:
“The argument for the UK’s majority of smaller practices banding together to protect themselves is increasingly strong,” he said. “Big established practices who can afford the high bar of in-house lawyers and the back-up compliance staff may be generally well catered for by Wren. But as we know, our professional landscape is dominated by practices with less than 50 staff. It’s time for the UK’s small practices to get together to form a new mutual not-for-profit insurance company – one that’s specifically directed at PII for their needs in a transparent, open and equitable structure.”
As a practice with a team of 12 (and having lived and breathed this issue for two years) we fully support this idea and we hope RIBA gets behind it, for the good of the whole sector.