02 Coverage

Generally speaking, there were no signs of insurers looking to expand policy coverage in the first half of the year and we do not expect this position to alter in the foreseeable future.

Fire safety

Discussions continued to be dominated by the issue of fire safety cover. Insurers’ position on this did not change significantly in the first half of 2022, as they seek to greater understand and limit their exposure.

The trend of aggregate limits of indemnity (often restricted to an inner limit) continued, as did the restriction in cover to direct loss and costs for rectification only, i.e., no cover for consequential loss. There also remains pressure on insureds to carry much higher policy excesses for fire safety related exposures, often applying to each claim, each site and each building, with retentions applying to defence costs as well as claims.

In some instances, insurers were offering coverage for fire safety on an RDI (retro date inception) basis, essentially excluding all fire safety related exposures prior to the start of the policy period, with limited cover thereafter. The thought process here being that the changes to building regulations should mitigate the main exposures seen previously, especially around fire safety and the combustibility of materials used in external wall systems.

Interestingly, the findings of the second professional indemnity insurance survey undertaken by the Construction Leadership Council (CLC) were published in early June 2022, confirming that nearly 70% of the 650+ respondents experienced some form or restriction for fire safety cover.

'Any one claim'

The availability of ‘any one claim’ cover remained a point of discussion in the first half of 2022. Insurers have been seeking to protect against multiple claims by limiting the sum insured to an aggregate amount, i.e. a total sum insured for all claims in the policy period. Those policyholders requiring ‘any one claim’ cover continued to resort to purchasing a higher vertical sum insured via layering (often referred to as a ‘tower’) and relying on ‘round the clock’ reinstatements to achieve ‘any one claim’ equivalent cover.

Other matters

The first half also saw PI insurers continuing to apply endorsements clarifying the intent of cover against cyber risks to adhere to the mandate as set by the regulatory body to eliminate ‘silent cyber’ coverages. Additionally, certain insurers sought to exclude claims arising from ‘non-conforming building products’, i.e., where an insured knowingly included non-compliant building products in their designs.