The tragic Grenfell Tower disaster in 2017 has left a lasting impact not only on the construction and housing sectors but also on the insurance market, particularly for architects.
While the event exposed serious flaws in fire safety regulations and construction practices, it has had unintended consequences for architects across the UK, including those who had no direct involvement in large-scale residential projects.
Architects working on smaller, less complex builds are now facing skyrocketing insurance premiums, which have become a significant financial burden, especially in relation to professional indemnity insurance for architects.
In the wake of the disaster, insurers have become more risk-averse, leading to a sharp rise in the cost of architects’ insurance. Premiums for architects’ PI insurance have surged as insurers seek to mitigate the increased perceived risk.
This type of insurance is often a professional requirement as well as a necessity to protect architects from claims arising from professional negligence, errors, or omissions in their work. However, the increased scrutiny on the entire industry has affected even smaller architectural firms and solo practitioners, despite the fact that many of them have little to do with high-rise residential construction, let alone cladding or fire safety concerns.
The architects’ PI insurance cost can now represent a substantial percentage of a small practice’s overheads. For many, the cost of obtaining or renewing policies has doubled, or even tripled, since Grenfell. For sole practitioners or small firms specialising in smaller projects like residential extensions, interiors, or office refurbishments, these spiralling costs are unsustainable.
Firms are left with tough choices: absorb the rising expenses, which eat into already narrow profit margins, or pass on the costs to clients, potentially making their services less competitive. In extreme cases, some architects have considered exiting the profession altogether, unable to shoulder the financial weight of escalating insurance costs.
What to Do If the Cost of Architects Insurance Is Too High
If you’re finding the architects’ insurance cost prohibitively expensive, there are a few steps you can take to try and reduce the burden.
- Shop around: Don’t accept the first quote you receive. Many insurance providers have different risk assessments and pricing models, so it’s worth shopping around for a better deal.
- Evaluate your risk profile: Some insurers may automatically decline or charge a lot more to architects who work on riskier projects – basements, swimming pools, listed properties or high-rise buildings. Unless you are specialising in these projects, consider whether, for the sake of one project, it is worth moving into a very different insurance price band.
- Don’t wait for a renewal: If you come across a good deal, don’t wait for your renewal to come around. Look at the cancellation terms of your insurance and if inexpensive, grab a better deal sooner.
- Consider exiting group or professional body Insurance: For very small firms or sole practitioners, it may be worth looking into their own insurance arrangements rather than being part of group insurance schemes, which, in recent years, have increased costs dramatically. The open insurance market can often offer better rates and policy coverage.
While the aftermath of the Grenfell disaster has led to rising costs for architects’ insurance, there are strategies that can help alleviate some of the financial pressures. The key is to be proactive in managing your insurance needs rather than accepting unsustainable costs as a given.
