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Professional Indemnity Insurance

An increasing number of members are reporting difficulties accessing affordable and effective Professional Indemnity (PI) Insurance. The market for Professional Indemnity Insurance continues to experience volatility reflective of the perceived risk profile of the construction sector.

Engineers Ireland continues to engage with insurers, statutory agencies and construction industry bodies on the topic of PI Insurance.  The area is complex with many different inputs including procurement, fire safety, building regulations etc.  The Irish market for PI Insurance is experiencing the same influences as other markets from the UK to Australia. There is no simple solution to the current market, but members can prepare in advance to obtain the best available cover.

Here are some steps to consider when seeking a quotation for cover:

  • Preparation is important – the market is more complex so start your search for a quotation 2-3 months before your existing cover expires. This will provide the best opportunity to compare insurance offers.
  • Be sure to have a list of your projects and a corresponding risk assessment to provide to prospective insurers.
  • Let your clients know that the insurance market is changing - this will allow you to indicate changes, cost and cover for their projects.
  • The below video, kindly provided by our partners Griffiths & Armour, also provides some additional guidance.

 

Revised Guidelines

In February 2022, revised guidelines for Professional Indemnity Insurance (PII) for public works projects procured under the Capital Works Management Framework (CWMF) were published.

These revised guidelines are being introduced in recognition of the significant changes in the cost and availability of PII over the last 18 months. The revised guidelines are designed to reflect the level of insurance currently available thereby ensuring that contractors and consultants can continue to participate in competitions for public works projects whilst maintaining levels of insurance that are proportionate to those projects. See this website here for more information. 

Actions by Engineers Ireland

Joint Oireachtas Committee Meeting

On 26 May 2021, difficulties around Professional Indemnity Insurance (PII) were raised by Engineers Ireland at a Joint Oireachtas Finance, Public Expenditure and Taoiseach Committee meeting.  The speakers were Engineers Ireland’s Vice-President John Power and Michael Lyons, Chair of our Fire and Safety Division.

The link to the recorded session can be found here. The formal topic is called: ‘Engagement with representatives of the insurance industry.’ The public session begins after 18 minutes. 

Correspondence from Engineers Ireland

On 26 May 2021, Damien Owens, prior Registrar and current Director General of Engineers Ireland wrote to 20 elected political representatives and Government officials seeking a meeting about PI insurance. In his letter he said that: The current market developments are of particular concern for Fire Safety Design and Certification, but it is a problem that will impact on all areas of the construction sector including houses, apartments, factories and public infrastructure. For example, without the required insurances, engineers’ BCAR certification will be undermined by the lack of cover which in turn will impact the completion of building of housing and commercial developments already delayed by the pandemic.

Joint Correspondence from professional organisations

On 2 June 2021, a joint letter issued from Engineers Ireland’s then Director General, Caroline Spillane, RIAI CEO, Kathryn Meghen, ACEI Secretary General, Sarah Ingle and the SCSI CEO, Shirley Coulter to the named members of Government (below) and officials.

The intention of the letter was to highlight the ongoing difficulties faced by the construction professionals PII and the urgent actions that are needed.  The four professional associations have asked to meet with the political representatives and officials listed below.

Some points made in the letter:

Over the last four years, there has been reduced availability of PII for construction professionals; increased premiums; a shift towards ‘in the aggregate’ from ‘any one claim’ cover and an erosion of cover through tightening of policy terms.

Practices are reporting:

  • Premia have increased significantly over the past four years, without a change to the risk profile of the practice or likely claims.
  • Excess has increased fourfold over the past four years.
  • In 2021, practices are seeing the removal of cover for Fire Safety design / components, which this effectively precludes a practice from continuing to work and provide services.

Practices whose underwriters are leaving the market are facing the greatest challenge. Some of these firms are unable to get any PI insurance and are being forced to close.

The joint letter was sent to:

  • Taoiseach Micheál Martin TD
  • Tanáiste Leo Varadkar TD, Dept of Business, Enterprise and Innovation
  • Minister Paschal Donohoe TD, Dept of Finance
  • Minister of State, Seán Fleming TD, Dept of Finance with responsibility for Financial Services, Credit Unions and Insurance
  • Minister Michael McGrath TD, Dept of Public Expenditure and Reform
  • Minister Eamon Ryan TD, Dept for the Environment, Climate and Communications
  • Minister Darragh O’Brien TD, Dept of Housing, Local Government and Heritage
  • Minister of State, Peter Burke TD, Dept of Housing, Local Government and Heritage

And

Mr Ronnie Downes, Mr David Moloney, Mr David O Brien and Mr Paul Quinn.

National Media

Newspaper articles are covering the matter:

Irish Times - Home building may be delayed as engineer insurance costs spiral

Irish Examiner - Housing crisis to deepen as fire experts face 'insurance crisis'

Michael Lyons was on Drivetime, RTÉ Radio 1 at 5:18pm on Thursday 27 May 2021 on the same subject matter. Listen to the interview here.