Insurers are urging the construction industry to embrace reform in order to help improve the provision of professional indemnity insurance for the sector.

The International Underwriting Association has called for continuing improvements to regulation and culture, prioritising quality construction and safety over cost-cutting.

A recent industry survey published by the Construction Leadership Council highlighted significant cost increases and the introduction of new restrictions on PI cover following a period of difficult underwriting conditions and deteriorating claims performance, driven partly by endemic problems within the industry, members of the IUA’s Construction Professional Lines Working Group believe.

Numerous issues influencing risk management have already been identified by the Hackitt Inquiry established in the wake of the Grenfell Tower disaster.

Chris Jones, IUA director of legal and market services, said it was clear that the construction industry and PI market have both experienced extremely challenging business conditions.

"Insurers have handled a great many claims arising from fire safety issues and the use of cladding, but although high rise residential buildings are the biggest worry there are also more widespread risk management concerns.

“We are encouraged by a proposed overhaul of the regulatory framework, but it is clear that many historical liabilities have yet to develop into claims and this remains a key factor for insurers in their underwriting assessment.

“A shift in culture is required in order to overcome continuing uncertainty about the enforcement of regulation and a lack of oversight and accountability in the construction process.

“In spite of many challenges insurers continue to offer a wide and competitive range of construction professional indemnity products. Construction is a complex industry and IUA members are keen to work collaboratively to ensure a better dialogue on risk management. We are pleased to be represented at the Construction Leadership Council.”

The IUA welcomed many of the recommendations in Judith Hackitt’s building regulations and fire safety report. Particularly important, it says, is the creation of a new building regulator to better identify the duties of those involved in the construction process and to ensure more robust oversight throughout the life cycle of a building. Reform should not, however, be restricted in focus to high rise residential buildings.

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