You will no doubt be well aware by now of the hardening market affecting UK based construction professional indemnity insurance risks. The number of insurers offering D&C PI has contracted, terms & coverage offered are more restrictive, limits of indemnity reduced, excesses increased, whilst premiums have risen sometimes by eyewatering percentages.
At Brunel Wholesale, we have direct access to wide proportion of the PI market that still writes construction risks. We’ve had considerable success over the first few months of this year in obtaining quotations for our brokers’ design & construct clients, for example:
- Roofing contractors with £9m turnover – 2018 premium £12,000 – our broker had been quoted £100,000 and was told it was the only quote available, we obtained cover at £33,000 within two days of receipt of the submission
- Sprinkler installer with £2.5m turnover- 2018 premium £5,250 – current insurer declined to renew, we placed at £9,250
- Mechanical & electrical contractors with a £30m turnover – 2018 premium £10,000, current insurers invited at circa £16,000, we obtained the full £10m at £12,500
Complete Submissions are Key
Underwriters have less time to look at submissions and many are insistent on seeing complete information from the start, the best submissions contain all of the following:
- A full proposal form, not a short renewal declaration form;
- A supplementary questionnaire regarding work on projects involving basements, swimming pools, fire suppression systems and cladding;
- CVs of the directors/principals or other employees who undertake in-house design work;
- Confirmation that sub-consultants who design or provide a professional service on behalf of the insured maintain an adequate level of PI insurance;
- Ensure the proposal form includes a design turnover split (as shown below);
- Ensure that there is a project split question on the proposal which provides a split in turnover between different building types and sectors, i.e. housing, retail, schools, hospitals, sewers etc.; and
- If there have been claims provide a summary of the circumstances of the claim, the known or potential liability of the insured, the potential to subrogate to third parties and the lessons learned in addition to the details of the payments made or reserves held.
Completing the Turnover Split Correctly
Time and again we see this key question completed incorrectly. It’s key that the insured understands the nuances of this question as it can have a major impact on the premium.