The 25th January saw the British Insurance Brokers’ Association launch their manifesto for 2023. At a reception held in the heart of the Houses of Parliament, BIBA set out their areas of focus for the year ahead. It is telling that the plight of professionals trying to secure adequate and affordable PI insurance remains at the centre of BIBA’s commitments.
For those who haven’t come across BIBA before, they are the trade body for UK insurance brokers, lobbying on behalf all those with interests in the UK insurance market. Over the years, they have led many successful campaigns on issues of national importance. With BIBA brokers placing around 93% of all commercial insurance business in the UK, they are a significant voice at Westminster and beyond. The G&A team have been proud to work closely with them.
In their manifesto, BIBA make some significant calls for action:
- A Government intervention in the PI insurance market to support those undertaking remediation work associated with fire safety.
- For the Building Safety Act to be revised to ensure that it does not disproportionally ‘dump’ risk on professionals.
- For the Building Safety Fund to be re-worked so that more SMEs can take part with reduced PI requirements (or such work to be underpinned by a Government indemnity scheme).
- To end the unfairness and potential inequality of the law on joint and several liability.
- To begin the lengthy process of re-balancing risk v. reward in the construction industry and improve the environment for everyone designing and constructing the built environment.
For regular readers none of these actions will be new. They reflect the calls that we, and other interested parties in the sector have been making for years. Increasingly vocally, too, in recent times. That BIBA have retained these themes at the heart of their commitments for the year ahead is a testament to the vital work that now needs to be done in order to secure a better tomorrow for the construction professions.
We are at an inflexion point. A moment in time that could well shape the collective futures of those likely to read this publication: the future of our clients, who do so much good in creating a vibrant, interesting and, above all, a safe built environment; and that of our insurance partners, who shoulder so much of the financial risk of doing so.
That inflexion point has been decades in the making but with the transformational Building Safety Act starting to be fleshed out, the spring of change is at its most coiled now. If we needed a reminder of what’s to come in the months ahead, it was brought to us over the last weekend of January in comment by the Secretary of State for Levelling Up, Housing and Communities in an interview with The Times.
In a wide-ranging discussion, he focused on the rollout of the Government’s ‘responsible actor scheme’, to be set up in the Spring. This landmark initiative is being pursued in response to what the Minister describes as previous “…sins of omission and sins of commission. There’s neglect and failure to effectively get the system in place, which is one thing. And there is an active willingness to put people in danger in order to make a profit, which to my mind is a significantly greater sin”. This allocation of responsibility between those that neglected to set the right rules and those that sought to ‘game them’ will be a central part of the findings of the Inquiry due later this year.
The reality is of course that most of the clients on whose behalf we act will fall into neither camp. Allegations against them won’t be underpinned by a hunger for profit, but by a significantly more complex web of reasons: from being put under pressure to ‘value engineer’, very often at the 11th hour, to signing a contract which saddles them with liability they should never have had. Few will be inherently ‘bad actors’. With varying degrees of culpability, they will have been ensnared in the wider cultural failings Dame Judith Hackitt was so critical of in 2018.
If the culture change that Dame Judith demanded and which is now enshrined in the Act is to ever come about, the corollary needs to be a change in the value attached to the work of those designing and constructing the built environment.
That value needs to be one measured in terms which are more reflective of those we’ve set out: the vibrancy and sophistication of the design of our built environment; the architectural interest and flair our clients bring to those designs; and critically putting safety at the forefront of everyone’s minds.
Aligned to this, surely the world needs to stop valuing what design professionals offer in terms of a combination of their ability to insure against PI claims, how onerous a contract they will sign and how low their fee is. There needs to be a holistic assessment.
If the Building Safety Act does nothing more than overlay the current ‘pricing and assessment’ model with additional liabilities, without generating and shifting the profession’s place in the value chain, then a once in a generation opportunity will have been lost.
Securing this value change is far from straightforward and it’s certainly not something that we as insurance brokers can achieve. But we can help the professions’ efforts to stimulate the debate. We can – and have – started to work with trade bodies, institutions, associations, Government and regulators. To highlight the benefits of best practice and share lessons from some of the worst. To suggest a better way.
Our main contributions to this debate must relate to the insurance and liability aspects of this future. We are not engineers, developers, law makers, funders or lobbyists. We won’t reframe ‘value’ on our own. But we recognise that for us to stick solely to providing PI solutions for our clients is too narrow a lens thorough which to view what lies ahead. This appreciation is the underlying reason behind us as a firm committing such significant resources to our industry advisory work and to engage with the broad range of parties that we have.
It would be far more straightforward and more profitable in the short term for us deploy our resources to simply focus on expanding our insurance and client portfolio. External shareholders, if we had them, would no doubt demand we did just that. Thankfully, our independence means that we can take the moment to pause; to not only look at the bigger picture but grasp the opportunity to try to help our clients do something about it.
We’ll be setting out later this year our ‘levers of change’ initiative. This will be a publication that builds on some of themes behind BIBA’s manifesto commitments and fleshes out some of the insurance, legal and wider problems we regularly see and indicate potential solutions to each. This is the culmination of work we have done over several years and which has fed into work we’ve undertaken with BIBA, the ACE, CIC, CLC, and many others, to allow them to take some of our modest building blocks to create a better future.
It will not be a revolutionary piece, though our agitating for change on matters such as joint and several liability has an air of rebellion about it. Mostly, the ideas will be familiar to us all. But we will try to bring these ideas forward in a coordinated way, through bodies like BIBA, to the attention of those who are in position to start to implement some of the broader changes that might be required. If nothing else, we can collectively arm them with the insight and knowledge that we can bring to the questions of insurance and risk. They aren’t just our ideas, of course. Because it’s our clients’ interests that have driven us to do what we have and it’s our clients’ ideas, suggestions and passion for their work that we hope to reflect, which we have so recently seen up and down the UK and in Ireland at our industry roundtables.
In the meantime, we’ll continue to support BIBA and other like-minded bodies to continue to advocate for our clients’ interests. 2023 is shaping to be a year of change and we plan to make a contribution to our clients’ efforts to ensuring that opportunity is taken forward positively.
In the coming weeks, we will follow this update with an interview with a prominent thought leader in the insurance industry to discuss some of the issues raised in the manifesto that directly impact our clients.
