ACE challenges Government over fairer professional-indemnity insurance

The Association of Consulting Engineers is calling on the Government to promote a bill to change the law on joint-and-several liability in the construction industry to address the problem of spirally costs of professional indemnity insurance. ACE chairman David Upton and chief executive Nelson Ogunshakin met construction minister Nigel Griffiths for a general introductory meeting, during which PI insurance was raised. The association presented a detailed report, which cited recent increases in premiums for PI insurance of up to 300% for some engineering consultancies. ACE represents over 750 UK engineering consultancies employing over 40 000 people and warns of a potential meltdown in the PII market if the situation remains unchanged. The minister told ACE that it was the first organisation the construction industry to raise the issue with him in such dramatic terms and promised ACE a considered response. Nigel Ogunshakin said, ‘The current situation is unsustainable. UK engineering consultancy firms are facing intolerable business pressures, brought on by PI insurance premiums which in some cases are up to 6% of their annual turnover. They are also facing rocketing claims excesses and an increasing number of limitations to their cover, including work in relation to asbestos and terrorist exclusions. ‘Many of our member companies are finding it increasingly difficult to operate within a legal framework in which they are regarded as the financial guarantor for other parties to a contract when claims arise. The current system of joint-and-several liability discriminates against firms, irrespective of blame, making them responsible for the failings of other parties over which they have no control.’ ACE believes that there is a growing practice in the construction industry for consulting firms to be included in a claim purely because they are likely to carry insurance, even where they have little, if any, potential liability. The association is pressing for Government to promote a bill to change the law on joint-and-several liability for the construction industry, including full consideration of a rational and fair statutory capping regime to alleviate the problems of disproportionate liability. ACE is also calling for measures to address the problem of terrorism exclusions in PII policies and the lack of available insurance cover for asbestos-related work. Nelson Ogunshakin says, ‘Only by removing the existing discriminatory system of joint-and-several liability and replacing it with some form of proportionate liability, together with sensible insurance premiums and excesses, can we be assured of a construction industry where companies can succeed in business and where clients and end users get the best possible outcome.’ A copy of the ACE report can be downloaded from the address below.
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