Mark Hide of Mark Hide Associates has been insured via the RIBA Insurance Agency for the past 13 years but can no longer obtain professional indemnity insurance that covers fire risk.
In 2018 the RIBA reported that one of the first major impacts of the Grenfell fire was rising PI insurance premiums, but the scale of the problem has grown dramatically since then.
Hide, who is a sole practitioner, was recently informed by the RIBA’s insurance agent Gallagher that any claim made relating to inflammable walls, doors, cladding and glazing would not be covered.
There have always been exclusions in PI insurance, such as asbestos, he acknowledges.
The difference now is that these exclusions are impossible to work around. ‘You simply cannot design a building without erecting a fire compartment wall within it,’ he says.
When Hide asked for clarification, he was told that an internal wall system ‘would include all internal systems such as plasterboard stud partitions’.
Gallaghers’ statement read: ‘The clause operates in two ways: firstly to deal with the cladding issues in the light of Grenfell and then secondly to deal with all other Fire Safety related issues on the back of the government reporting that Building Regulations were not fit for purpose’.
In reaction, Hide told the AJ: ‘That [explanation] is a horror story for the whole profession.’
He added that, while architects had become more careful about flammable materials, it was impossible to design a building with zero risk.
‘In the past, if you were found to be at fault [because of fire] you were covered under your insurance. Now you are not covered. And fire claims tend to be very significant claims.’
He acknowledged there was no easy solution. The RIBA has told him it can only provide what is available in the insurance market place.
As a result, he said, it was time the government intervened. ‘Either they need to say that Building Regulations are fit for purpose or there needs to be some kind of government scheme that underwrites professional indemnity insurance. In the absence of this, goodness knows what’s going to happen.’
He has until the end of March to find a policy that will cover him, otherwise, he says, he will be exposed to a level of risk that will not allow him to sleep at night.
‘The profession with the help of the RIBA needs to wake up and put pressure on the government and insurance industry to do something about it,’ he said.
HawkinsBrown co-founder Roger Hawkins, who is chair of the RIBA Insurance Agency, said he accepted there was a problem. ‘The market is in a bit of turmoil, he said. ‘And this is pre the coronavirus.’
The problem had really developed after the Grenfell fire, he said, but the real squeeze for architects had been caused by about a dozen devastating – albeit non-fatal – building fires last summer.
‘The common thread in those fires was timber-frame buildings. So they [insurers] are very nervous about modern methods of construction and cladding.’
Premiums may have been too cheap and, in the wake of last summer’s fires, there was a boomerang effect, Hawkins warned.
‘Premiums are going through the roof. That compares to premiums falling in the last 10 years. It’s been too cheap for too long; insurance companies have lost money. The danger is it [now] overcorrects.’
‘During the last crisis over PI in the 1980s, costs were extremely high, for some up to 10 per cent of turnover,’ Hawkins said. ‘Levels are perhaps half that now for many practices, but this is four or five times what they were a couple of years ago.’
He said that the profession needed to get together with the insurance industry and work out a way forward.
‘The insurance companies need to come to the table. It’s not fair to say that they are not going to insure plastic and laminate glass for example.’
The wording around cladding was now being debated ‘almost on a case by case basis,’ he said.
However the government’s focus on the coronavirus and the halting of the Grenfell Inquiry made it unlikely that anyone ‘was going to put their neck out’ to try to tackle the issue, he predicted.
The Association of British Insurers (ABI) says that the market reflects the heightened awareness of risk following the Grenfell Fire. ‘There is a level of uncertainty on insuring the construction industry, who are currently operating in a regulatory environment that has been classed as not fit for purpose, and a general view that there is a lack of competence around all those involved in fire safety of a building,’ an ABI spokesperson said.
‘The ABI has emphasised the importance of meaningful change through the review of building regulations to provide greater confidence to the market. Regulations which professional indemnity insurers had previously relied upon, but which ultimately proved to be flawed, are in need of fundamental reform.’