I was concerned to read your article on the recent ruling against Paskin Kyriakides Sands (PKS), found liable for costs and damages exceeding £25m, and with no more than £3m of PI cover (6 March, Insurance Times).
The pressure on architects' professional indemnity (PI) premiums is set to increase further, as a result of this landmark case, which saw the plaintiff client winning the first liability judgment against negligent architects who inappropriately specified the use of combustible insulated panels (CIPs). PKS PI cover only extended to £3m leaving a personal shortfall of £22m.
No doubt, in light of the news, architects will be panicking, concerned that their present PI arrangements are insufficient, and that former clients will now be reviewing outstanding or past losses with a view to making similar claims.
We claim that further premium hikes seem a distinct possibility in a market where premiums already account for most companies' second biggest expenditure outside IT. We fear a knee-jerk arbitrary reaction by insurers applied indiscriminately to architects .
We recommend that architects approach specialist PI brokers who will understand this judgment when securing PI coverage for their clients from insurers.
Brokers must be committed to providing as full a picture as possible about a client to an underwriter and argue their individual circumstances, in order to secure them the most appropriate and individually tailored coverage.
Without this commitment, the resulting coverage may not represent either value for money or indeed adequate to cover architects for potential risks - as Paskin Kyriakides Sands unfortunately learned.
Director of PI
Howden Insurance Brokers
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