Government Action Required on Professional Indemnity Insurance

25th July 2019

This morning the ACAI published an article outlining how the matter of Approved Inspector Insurance should be tackled by Robert Jenrick the new Minister for Housing, Communities and Local Government.

The article published on July 25th reads;

The Association of Consultant Approved Inspectors (ACAI), the body which represents the majority of the UK’s private Approved Inspectors (AIs) and almost half of the building control industry, has called on newly appointed Housing Secretary Robert Jenrick MP to urgently review the government-regulated AI Scheme of Insurance to prevent major disruption to construction projects across the UK.

Private building inspectors must hold professional indemnity and public liability insurance to trade in the UK, which enables building owners to claim compensation if any faults signed off by inspectors are discovered after construction.

The terms for this insurance are set by the UK Government but are widely considered to be too stringent to be commercially attractive for insurers. Following changes in market conditions after the Grenfell Tower fire, insurers have now withdrawn from providing new contracts, market meaning private inspectors are unable to renew their terms – forcing them to cease trading.

Currently (25 July 2019) three AIs responsible for more than 5% of live UK construction projects have ceased trading. In the next 5 weeks to 21 August a further 11 will cease trading; while by the end of October, 15 in total will have been forced to stop work because of Government inaction – representing more than 15% of all live projects.

The ACAI had been engaged closely with Jenrick’s predecessor, James Brokenshire MP, who met with industry representatives at a roundtable last week. The new minister must now ensure that positive discussions between the industry and the Government are put into urgent action, either through changes to the terms of insurance or through Government backing for AIs while the industry develops its own long-term solution.

Paul Timmins, Chief Executive of the ACAI, said:

“The Government is on the cusp of a disaster of its own making if it does not act now on AI insurance.

“If private inspectors are forced to cease trading en masse there will be significant job losses in the sector and major projects delays which will hit the construction industry hard, as well as the Government’s own housing ambitions. It simply is not enough to hope that overstretched local authorities will be able to pick up the pieces.

“The Government must consider the impact on consumers. Even where local authorities can pick up private sector projects, they are not obliged to hold insurance cover for consumers, leaving consumers with less protection, and there are significant costs associated with the transfer of projects.

“We have been engaged in a constructive dialogue with the Government in recent months, but the time for talk is over. The Government must take responsibility for action now or wake up in several weeks’ time to a crisis which it could have prevented.”

Assent fully support the need for urgent action and will continue to lobby MP’s and key stakeholders to deliver a solution that will continue to provide long term stability to the construction sector.

Link to original article


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