International Underwriting Association (IUA) has lent its support to the UK Government’s Building Safety Bill, which aims to provide insurers with greater confidence to develop new products for construction professionals.
However, the IUA warns that the core aims of the legislation must be properly implemented, resourced and enforced.
“The Bill is good news for the construction sector and its professional liability insurers,” said Michael Attwell, Chair of IUA’s Construction Professional Lines Working Group.
“But limiting its scope only to high-rise buildings passes up the chance for a new, more balanced approach to fire safety. This is an ideal opportunity for the regulation of all buildings to be based on their underlying risk.”
The IUA has also highlighted possible problems for professional indemnity insurers if there is a retroactive application of liability.
“Applying changes to legislation retroactively is always difficult for insurers because of the potential for reopening historic claims, instigating new claims and, perhaps above all, fostering uncertainty about how regulation is applied,” said Chris Jones, IUA Director of Legal and Market Services.
“Insurers are already facing significant claims around historic building regulations and the plans for retroactive liability need to be thoroughly assessed against a deteriorating claims situation,” jones explained. “Companies must be able to accurately assess and manage their potential exposures. Otherwise there could be a serious negative impact on the commercial appetite to write this class of business.”
Attwell added: “The Building Safety Bill is an important first step in improving the long term outlook for both the construction sector, but the short-term market conditions for insurers remain extremely challenging.
“It is vital a new regulatory framework is established to drive a culture change that prioritises quality construction and safety over cost-cutting. The IUA remains committed to working collaboratively with the government and industry stakeholders to ensure better risk management, which will in turn enable insurers to offer a competitive range of construction professional indemnity products.”
The IUA’s Construction Professional Lines Working Group was established in 2019 to encourage greater engagement between insurers, government, regulators and construction firms.
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