Architects Registration Board – Consultation on draft guidance for Professional Indemnity Insurance
18 May 2022
For some time we have been highlighting the challenging Professional Indemnity market. This time last year the RICS changed the rules for surveyors, making it even more of a headache to secure the cover they required.
We are pleased to see the Architects Registration Board (ARB) is looking at how it can adjust its demands on architects’ indemnity insurance cover, publishing new draft guidance on the insurance requirements expected of architects to remain compliant with its code of conduct.
Acknowledging the challenges of the global PI market, the ARB said it had become ‘increasingly apparent’ that, for some architects, the ‘changes in the insurance market outside their control means that meeting the existing guidance may no longer be possible’.
Anyone within the sector will be all too aware that PI premiums have soared, in some cases the renewal premium costing three times that of the previous year. As if that wasn’t enough of a challenge, the numbers of policy exclusions imposed by insurers has skyrocketed too, particularly in respect of cladding, fire safety and even basements.
With no way to resolve or even influence the issues with the global PI market experienced by its own sector and indeed others, it acknowledged that it could bring in changes that were ‘proportionate and risk based’ to support architects through the hardened market. They stated ‘We can’t set requirements architects simply cannot achieve’.
The Architects Code of Conduct sets out the PI requirements for architects, underpinned by ARB guidance which explains how compliance can be achieved. The revisions the ARB propose went out to public consultation on 16 May, these include no longer making it a matter of misconduct if an architect cannot acquire retrospective insurance to cover historic liabilities due to new exclusions applied to their policy by their insurer.
Coverage for certain types of claims, including cladding and fire safety, could now be held on an aggregate basis (rather than an each and every claim basis) and limited to covering direct losses. However, the draft guidance adds that no architect should accept a minimum level of cover below £250,000 for each and every claim and reaffirms that architects should have adequate insurance before undertaking any new work.
ARB chair Alan Kershaw said: ‘PII provides crucial protection to architects, their clients, and the people who use their buildings. ARB has to balance the need for public protection with the availability of insurance. We can’t set requirements that, however well-intentioned, architects simply cannot achieve. He added: ‘The updates to our guidance on PII are intended to clarify how architects are expected to deal with professional indemnity insurance at this difficult time, while still protecting clients and future users of the buildings they design. We now want to hear from architects, insurers and the groups that represent consumer interests.’
The draft guidance was produced following research and engagement with the insurance market and professional bodies and is now in public consultation before it is finalised and comes into force later this year.
To read more about ARB’s proposals and take part in the consultation, use the following link:
We’re here to help
We welcome this proposal from the ARB that will certainly help us and our clients. The proposed changes make our role as broker even more important, as our knowledge and understanding enable us to fully support to our architect clients with their PI cover and associated costs.
If you need help, just get in touch with Charlotte Perkins.