As the PI Insurance market looks to broaden its stance on fire safety and cladding cautiously, Willis, a WTW business is at the forefront, helping firms like yours seize emerging opportunities.
Recent years have seen a move away from the blanket fire safety / cladding exclusions imposed on many firms. Restricted cover is generally available for newer work, and for legacy work if appropriate detail, narrative and comfort have been provided. There has been a willingness amongst some insurers to offer limited coverage in respect of ‘consequential losses’ stemming from fire safety / cladding claims attaching to newer projects (which have generally been excluded to date). Insurers remain cautious and very much alive to the potential for continued notifications and claims deterioration, particularly given the legal context and ramifications of the Building Safety Act and associated legislation. But there is scope to enhance fire safety / cladding cover with a carefully considered strategy.
In an evolving risk landscape, architects are increasingly confronted with new and complex challenges, for example, rising project demands, contractual obligations, legal developments and greater regulatory scrutiny. Allied to this, architects face additional challenges in the UK PII market. Whilst conditions have improved considerably over the last couple of years since the depths of the hard market (insurer appetite has increased markedly, and premium rates have reduced meaningfully in that time), PI insurers remain highly selective, especially when it comes to coverage in respect of fire safety and cladding risk. Each firm is subject to individual scrutiny, as persistent claims activity and evolving regulatory requirements continue to drive insurer caution. Navigating this environment requires a proactive and strategic approach to risk management and insurance placement.
There are frequent PI claims notifications made against architects. Analysis of Willis’s proprietary architect’s PI claims data highlights about a third of architect’s losses stemming from design defects, with a similar amount stemming from project management and coordination roles. The impact of third parties is a dominant risk factor, with some 40% of claims seeing architects brought into disputes where a third party was ultimately responsible for the loss. Another common theme is inadequate supervision or management of third parties, as was the failure to check designs/information supplied by third parties. Notably, recent years have seen an increase in notifications relating to product defects, especially cladding-related issues that emerged in the wake of the Grenfell Tower tragedy, often in the absence of direct allegations against architectural firms.
Looking ahead, whilst PII market conditions remain good, the outlook in respect of fire safety and cladding PI coverage remains challenging. The introduction of the 2023 Building Safety Act (BSA) and subsequent secondary legislation has introduced new exposures and heightened uncertainty. As the BSA continues to evolve, the ramifications for architects and the PII market will continue to unfold. What is already clear is that insurers will place increasing emphasis on how firms demonstrate awareness of the legislation and implement robust risk management practices accordingly. A proactive approach to compliance and documentation will be critical in shaping how insurers assess a firm’s risk profile in this shifting regulatory environment.
In this climate of evolving regulations and persistent challenges, the PII market has shown some inconsistency. Whilst some insurers continue to tighten fire safety and cladding coverage, others have looked to ease conditions (the RICS Minimum terms for Chartered Surveyors have improved fire safety coverage, for example). Another notable example is the recent concession by some insurers to include coverage for fire safety and cladding-related consequential losses, a development that would have been nearly unthinkable just a few years ago. This inconsistency underscores the critical importance of working with an expert broker who can navigate the nuances of the market and secure the most favourable outcomes for clients.
We would be delighted to help you optimise your PII placement. Willis plays a critical role in helping architects navigate uncertainty and secure optimal outcomes. By combining deep sector expertise with strong insurer relationships, Willis delivers tailored insurance solutions, strategic claims advocacy, and proactive risk management support. Our early engagement model ensures that firms are well-positioned in the eyes of underwriters, while our insights into regulatory developments — such as the Building Safety Act — help clients stay compliant and resilient in a shifting landscape.
In addition, Willis has an established ‘Excess Layer’ PII facility (ProXS), which offers customised excess PII coverage, providing up to £25m capacity above a firm’s initial £10m of existing coverage. Our streamlined process allows you to easily augment your existing PI Insurance with an excess layer solution designed for your firm’s specific needs. ProXS is designed to provide efficient and attractive pricing options, driving competitive tension. Additionally, any insurers displaced by ProXS frequently seek other opportunities on that firm’s placement, driving a second wave of competition which can have significant impact on overall premiums.
As architects navigate the challenges presented by the PII Market, Willis stands as a trusted partner offering specialised knowledge, innovative risk solutions, and dedicated claims support.
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