construction industry professional indemnity insurance

By: Jason Forsyth

Date: October 21, 2022

Category: Professional Liability

Give yourself a fighting chance… 

Whether you are an insurance buyer, or an intermediary taking a clients’ insurance program to market, the challenges facing construction industry participants have never been more telling.

Increasing levels of regulatory compliance and oversight; project complexity; escalating materials and labour costs; onerous contractual requirements and geopolitical turmoil are but some of the factors that are presently impacting the construction industry. When these concerning trends are overlayed with poor underwriter prior year claims experiences, the current retraction in insurer appetite for risk and the resultant limited availability of quality capacity was always a foregone conclusion.

While these challenging conditions do not look like changing in the foreseeable future, professional indemnity insurance will continue to be one of the most important means of managing business and contractual risk.

So What to Do?

For brokers that are looking to give their clients a fighting chance at securing adequate professional indemnity insurance coverage and at commercially viable terms, taking on board the following tips will hopefully stand you in good stead.

Early Client Contact is critical. The importance of this cannot be overemphasised. For smaller consulting and professional services firms, think at least 30 days prior to renewal. For larger design and construct contractors or multi-disciplinary professional services firms that are involved in heavier risk industry segments, engaging with your clients and the market 2 to 3 months prior to renewal is advisable.

Market Engagement. Gone are the days where a ‘dear underwriter’ email and proposal form are simply good enough. Engaging with your client and actually understanding their business will definitely serve you well. Do not ‘flood the market’ with a cut and paste email, website address and unsigned prop. Finding yourself on an insurers ‘serial pest’ list typically equates to an automatic decline.

Would you be comfortable in putting your client in front of their existing insurer or a panel of potential new underwriters? Active face-to-face market engagement with a well-prepared client is an ideal way to encourage dialogue and demonstrate the quality of your client’s business. Developing and strengthening new and existing relationships is also particularly useful on these longer tail classes of insurance.

Quality Submissions make all the difference. As insurers continue to dissect and segment their books of business, it is imperative that brokers demonstrate their ability to add value. A sizeable percentage of broker submissions end up being automatic declines particularly when the content is generic or incomplete. Understand your markets and their appetite and personalise each submission accordingly.

Actively Addressing Hurdles and demonstrating how your client is managing and mitigating their risk(s), will always be welcome news to insurers. Experienced underwriters are well acquainted with the challenges faced by construction industry participants. Staying in front of the curve, addressing industry or individual challenges and methods that your client has or is putting in place to remedy or mitigate risks to the business is an advisable approach to take from the outset.

Policy Coverage. Unlike some of the more homogenous compulsory classes of insurance, the coverage available under professional indemnity insurance policies can differ greatly from one insurer to the next. Focus on the core policy coverage elements as opposed to the bells and whistles that are head lined within the extensions section. Many of these extensions need to flow through the policies insuring clause so don’t get too caught up in the fluffy stuff.

Does the policy have a broad civil liability or allegation based insuring clause, or is it restricted to negligence only? Is the policy limit costs in addition or inclusive of costs? Are there tight contractual liability or consequential loss exclusions?

Actually obtaining an insurer quotation may in some instances be seen as a win on its own, and while beggars can’t be choosers so to speak, ensuring that the policy meets your clients’ needs and tolerance for risk, both contractual or otherwise, should always remain front of mind.

Challenging Conversations. Rollover renewals are a thing of the past so prepping your client early is important.

If your client is an existing PI insurance buyer, working with the existing insurance carrier will more often than not be the most appropriate path to take. Relationship, and importantly continuity of coverage on long tail insurance classes is an important consideration in challenging times. If you are able to secure renewal terms, use this as the base line and look to negotiate if possible. If there is a requirement to go to market, then take on board the above comments and be sensible in your approach.

Maintain a Positive Outlook. While perhaps easier said than done, the insurance market is cyclical and will continue to move through soft and hard market cycles. Be it on onerous terms or otherwise, an experienced and well-prepared broker should be able to find an appropriate insurance solution for their client. Understanding your client’s insurance buying needs, and engaging and preparing early, will hopefully position you well in what will likely remain a challenging PI insurance environment.

At Aquarium Risk Consulting, we support brokers with go to market strategies on the most challenging of PI programs. For further information on how we may be able to provide support, visit our website or contact Jason Forsyth on or +353 (0) 83 206 0721.