IUA urges construction industry to stop cutting corners

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.

    Share Story:

Recent Stories


Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021

Manufacturing: An industry at risk amid great technological change
Of the many sectors of business, manufacturing companies are among the most at risk from cyber threats. How has the sector evolved to make it so vulnerable and what does the task of managing cyber exposure in a manufacturing company look like? CIR’s latest podcast with Tokio Marine HCC sought to answer all these questions and more. Published April 2021

Advertisement