After facing a challenging number of years, the Professional Indemnity (PI) insurance market witnessed a shift in favour of architects throughout 2024, and we expect this trend to continue in 2025.
Increased capacity and a desire for growth amongst insurers have fuelled competition and contributed to rate reductions becoming a regular outcome at policy renewals.
After several years of increased rates, SMEs understandably are now looking to take advantage of more favourable market conditions. Whilst premium savings are of course attractive, architects should be aware of new entrants in the market writing business at unsustainable rates, and/or offering restricted coverage.
It appears to be market dynamics rather than underwriting profit that is driving the market down. In general, we have not yet returned to the rates of 2017 and prior, but the sustainability of the current direction of travel is questionable. Particularly against the backdrop of economic uncertainty, claims of inflation and emerging risks such as AI. Emerging technologies like AI pose unique risks to the architectural profession, which could affect future claims trends. In addition, Architects' architects’ professional liability claims trends resulting from the new legislative environment are yet unknown.
The hard market of previous years highlighted the importance of a well-presented and compelling renewal submission. Insurers were reluctant to write business if renewal presentations contained missing information and were unorganised in their nature. Whilst we are now seeing more willingness from insurers to entertain enquiries, the quality of the renewal submission remains vital in achieving the best possible results.
A benefit of working with a specialist insurance broker is they will be able to guide you through the information and supplementary forms required for a successful policy renewal.
Taking time to prepare a singular Insurance Presentation document, containing all the required underwriting information, supplementary forms and index page goes a long way in demonstrating to insurers your proactive approach to risk management. This process also reduces the risk of miscommunication and ensures clarity for the underwriter. This also avoids excessive data with multiple attachments and information which will inevitably cause an underwriter (who sees multiple submissions every day) to lose interest and focus on a more compelling and professional risk submission.
We have compiled some tips below for how to improve your renewal submission. These tips have contributed to more favourable renewal outcomes in the past.
Top tips for renewal presentations:
- Collate all the information into one PDF insurance presentation document with an index and front cover
- Use the forms/questionnaires requested by your broker/insurers as the basis of your document
- Include an executive summary covering the firm’s history and any specialisms (sector/building types etc.), but also any key points as to why you consider your business low risk and unlikely to suffer from claims. Examples could be the majority of your work having no site/inspection role, or perhaps you have robust internal risk management processes that have a clear track record of working
- Consider adding additional information via graphs/charts. Such as work splits, company structure diagrams (to demonstrate internal project oversight) and revenue breakdowns
- All unresolved claims/notifications or claims with payments should have a summary of the present position and if appropriate your view on liability, and/or the likelihood for the matter to progress adversely. Also include any known reserves or payments by insurers
- Include a summary of the lessons learned from your experiences with professional indemnity claims. You must demonstrate any key takeaways or insights you have gained, particularly in relation to risk management, communication with clients, documentation etc. This can help insurers understand your commitment to continuous improvement and reducing future risks. Your perspective will be valuable in helping to demonstrate to insurers that a recurrence of a similar claim is unlikely. If you have improved processes or procedures in response to a claim, this will demonstrate active risk management
- Don’t wait to be asked! If you have a particular element of your risk profile that could be seen as having a higher than typical liability (for example a difficult jurisdiction, higher contract value or innovative design) then explain the elements that reduce the exposure. Addressing these factors upfront builds trust with insurers and reduces the likelihood of surprises down the line
- Don’t think you have to rigidly abide by the forms/questionnaire supplied to you. If you consider your risk profile can be explained by a different data set, or a slightly altered question then include such within your Presentation. In such circumstances, you should refer the reader to the data included and the criteria you’ve used to make the disclosure
- Explain the systems you have in place for your staff to keep up-to-date with industry developments, regulatory changes, and emerging risks in your sector. For example, if your team attends industry conferences or participates in training programs, highlight this to show your proactive approach to mitigating risks. This will demonstrate to insurers that you seek to identify potential risks and take steps to mitigate them before they turn into claims. Outline the quality control systems that you have in place to reduce the risk of issues and claims arising. For example, any formal certifications that you have to evidence quality control practices, such as ISO 9001
- Describe your process for ensuring written terms and conditions for your projects are in force at the outset and any limitations you include, such as liability caps. The ability to defend claims can be impacted without an unambiguous scope of work, project schedule, defined duties and so on. Claims that otherwise could have been easily defended could be dragged out due to vague terms and obligations. Confirming to insurers that your responsibilities (and those of your clients) are clear and fair/reasonable will assist with encouraging insurers to issue quotations
- If you undertake the new Building Regulations Principal Designer role or other distinct roles that are not necessarily considered within the usual remit of an architect, these should be specifically disclosed to insurers within your Presentation
Insurers will in the main respond well to concise, pertinent and clear risk profile information. Highlighting your firm's unique position in the market, such as specialised design areas or regulatory compliance, can further demonstrate your proactive risk management. Evidencing an adverse approach to risk is key but excessive data will usually add little value to the renewal process.
Please be aware that it is a legal requirement under the Insurance Act 2015 for you to make a fair Presentation of the risk to insurers. This means disclosing every material circumstance that you know or should know relating to the risk to be insured, including information known by your senior management and those responsible for arranging your insurance, as well as information that would be revealed by a reasonable search of information available to you. It’s important to keep this in mind to ensure that you comply with the legal requirements and provide insurers with all the relevant information they need to assess the risk. Failure to fairly present the risk can lead to your insurers reducing cover or voiding your policy.
If you have any further questions or concerns about professional indemnity insurance, risk management, or the renewal process, please don’t hesitate to contact us.
How can Gallagher help?
At Gallagher, we are committed to guiding our clients through the complexities of insurance. Our team can provide tailored advice based on your specific circumstances, helping you navigate regulatory requirements, purchase processes, and cost management.
We understand that each architect's situation is unique, and our expertise in financial and professional risks positions us to offer comprehensive support. Whether it's advising on limiting contractual liabilities as you approach retirement or assisting with annual renewals, our goal is to ensure you remain protected.
For more information visit RIBA Insurance Agency to view the products available. You can get a quote for PI Insurance and other products through the online quote-and-buy platform.
This article was written by Gallagher, an insurance specialist who advises on insurance covers and is one of the UK's leading insurance brokers. RIBA Insurance Agency is a trading name of Gallagher.
This information is not intended to constitute any form of opinion or specific guidance and recipients should not infer any opinion or specific guidance from its content. Recipients should not rely exclusively on the information contained in the bulletin and should make decisions based on a full consideration of all available information. We make no warranties, express or implied, as to the accuracy, reliability or correctness of the information provided. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide and exclude liability for the statistical content to fullest extent permitted by law.
RIBA Financial Services Limited is an introducer appointed representative of Arthur J. Gallagher (UK) Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: The Walbrook Building, 25 Walbrook, London, EC4N 8AW. Registered in England and Wales. Company Number: 01193013.
