• 15 May 2024

Are you asking your broker the right questions for optimal outcomes during your professional indemnity insurance (PII) renewal? Here are a few thoughts from Miller’s Construction PI team.

Market conditions

Has your broker approached the market in full at renewal to ensure that your programme is still price competitive in today’s softening market? 

The UK PII market is experiencing a period of softening, leading to reduced rates for insureds demonstrating strong risk management practices and good claims records. With the market conditions improving, insurers are engaging in heightened competition and looking to increase their PI portfolios through deployment of more capacity internally, or through managing general agents (MGAs). This increased competition has led to rate reductions for firms operating in the built environment. 

Improved coverage

Does your current coverage align with what is now available in an improved PI market?

During the hard market, insureds operating in the built environment faced reduced levels of PI cover. An obvious example of this is the introduction of fire safety restrictions, and in many cases complete exclusions.

Miller is seeing that in specific cases, insurers are now able to agree to enhanced fire safety coverage for clients who previously had total exclusions. This is largely for work going forward as insurers remain hesitant to extend broad coverage for claims related to work conducted before the introduction of the Building Safety Act 2022. 

Insureds are advised to consult their broker regarding the potential impact of the Building Safety Act on their PI coverage. While insurers aren't presently implementing restrictive language directly due to the Act, heightened exposure and claims could lead to subsequent exclusions in the future.

Programme structure 

Is your insurance programme structure the most efficient structure to achieve the best premium?

Throughout the hard market, rates were seemingly increasing exponentially and markets who had been writing the business for a long time, disappeared overnight. Brokers therefore needed to adapt to ensure their clients were still getting the best deal possible. Whilst increases in premium were still large, a huge deal of work was done in ensuring that limit and excess structures on programmes remained at their most efficient and cost effective. 

As market conditions turn more favourable, this exercise is still incredibly important. Certain insurers might be more comfortable on a programme where they attach at a slightly higher level, or they might prefer the limit of the layer that they sit on to be slightly larger (reducing the risk that their percentage line will suffer a total loss). As such, you should look to familiarise yourself with the structure of your insurance programme and ask your broker, particularly if it has been the status quo for a long time, whether this is the most efficient structure to achieve the best premium.

The same goes for excess structures, it always appears that once an excess is increased, it is much harder to bring it down again, whereas premium appears to be a much more moveable leaver. As such, it is key that you ask your broker whether the excess structure is in line with market standards and how else they might be able to structure this to be more advantageous, particularly if there has been claims activity on your programme.

Added value

What other services do you provide beyond placement?

There is a huge amount of choice when deciding which PII broker is right for your business. The best brokers are those who go above and beyond for their clients outside of just renewal and can offer a range of services. Some of those services that Miller can offer clients are:

  • Risk management advice - helping clients to identify and assess risks associated with their projects and business operations. This can include guidance on risk mitigation strategies and best practices to minimise the likelihood of claims or disputes.
  • Contract reviews - including agreements with clients, subcontractors and suppliers to identify potential liabilities and ensure that appropriate insurance coverage is in place to address any contractual obligations.
  • Training seminars or workshops - to educate clients and their staff about risk management, insurance fundamentals, and regulatory compliance requirements relevant to their industry.
  • Market intelligence - insights into market trends, pricing dynamics and emerging risks within the construction industry. This information can help clients make informed decisions when selecting insurance products and negotiating terms with insurers.
  • Benchmarking analysis - Benchmark their clients' insurance programs against industry standards and peer performance metrics to identify areas for improvement and optimization. They may also conduct periodic reviews to ensure that coverage remains aligned with evolving business needs and regulatory requirements.

By offering these additional services, we believe that we are able to become a trusted advisor, helping your firm navigate the complexities of risk management and insurance in a highly specialised and dynamic industry.