Written by: Griffiths & Armour on: 22 Jul 2021

Approved Inspectors Update:
New Griffiths & Armour 2021 Insurance Schemes Approved by MHCLG

Griffiths & Armour are pleased to announce that the Ministry of Housing, Communities and Local Government (MHCLG) have approved the evolved 2021 Griffiths & Armour Approved Inspectors (AI) Insurance Schemes.

The Background

The current Professional Indemnity (PI) insurance market is subject to significantly reduced capacity, leading to increased premiums for cover across the construction professions generally. This includes Approved Inspectors who have experienced a significant impact on their ability to secure PI insurance.

This situation for AIs is exacerbated as their insurance programme has to meet the minimum criteria of MHCLG via an approved scheme, which is designed to ensure that consumer interests are adequately protected.

That insurance specification is considered onerous by insurers and therefore both limits the insurers involved in the market in the first place and restricts the ability of those insurers to amend coverage in line with their risk appetite.

Over recent years several insurers have decided to withdraw fully from underwriting AI risks. In an effort to increase the options available to AIs, MHCLG agreed to amend the insurance criteria, and the new criteria were published in November 2019.

The Result

Griffiths & Armour have been liaising with key stakeholders from Government and the Insurance sector which includes established long-term partnerships with insurers to formulate a proposal for the launch of a new scheme which meets the new MHCLG criteria and crucially, maintains insurer appetite for AIs. This proposal has now been approved.

A consistent motivation for Griffiths & Armour since creating the very first commercially available AI insurance solution 25-years ago, is to ensure that long-term sustainable PI cover remains available to their existing and new AI clients.

The new schemes which have now been approved, will come as a huge relief to AIs and the wider construction industry and will apply to all AIs with renewals from 1st May 2021 onwards – each Griffiths & Armour client will be required to renew into the new approved scheme.

25 years of support for AIs from Griffiths & Armour

It is now 25-years since the launch of the Griffiths & Armour Insurance Scheme for Approved Inspectors – a major step which underpinned the creation of what was heralded as a vibrant new professional role within the private sector.

There have been huge changes – and new opportunities – for AIs since then; in the early days, insurance was the mechanism used by Department of the Environment, Transport and the Regions (DETR) to restrict an AI’s sphere of operations. For those that have been active since those early days, you may remember the phrase ‘are not dwellings, nor contain dwellings’!

As Central Government became more relaxed, we saw the introduction of the Warranty Link Rule (WLR) – which was the first opportunity for AIs to work on domestic properties. It was not long before the WLR was discarded and today the building control function can be performed by an AI on all classes of structures. In parallel, the Griffiths & Armour specification has been developed to support and respond to each stage of the evolution in AIs’ spheres of influence.

“We provide trusted and proven solutions for our clients, having now consistently delivered a bespoke and continuous offering for AIs since 1996. This is the result of our understanding of the AI role and the particular nature of liabilities attaching to the services that they provide.

We have only been able to provide this stability and continuity through long-term relationships with our insurer partners, who themselves, are high profile household names. In fact, we have only had 2 lead insurers in the 25-years that our AI Schemes have been in place.”

Carl Evans, CEO – Griffiths & Armour

“Our dedication to Risk Awareness and Management has allowed us to support and assist the CIC and ACAI’s work to publish a 3rd Edition of their Conditions of Engagement of an AI.

We are confident that our new scheme structure offers essential protection that supports the continuity of Approved Inspector services and is carefully tailored to meet individual regulatory needs.”

Tanya Winstanley, Professional Risks Director, Griffiths & Armour

“The last few years have been particularly challenging for the Approved Inspectors industry sector, and I was delighted to learn that the 2021 Griffiths & Armour Scheme secured approval from MHCLG.

The consistent and informed risk and insurance advice we have received from Griffiths & Armour over many years has offered my firm and the association invaluable support. We look forward to continuing that proactive collaboration into the future.”

Paul Timmins, CEO, The Association of Consultant Approved Inspectors (ACAI)

Further information:

What is an Approved Inspector?

Approved Inspectors (AIs) are private sector businesses who provide building control services and are required to have insurance from a government-approved scheme to provide additional safeguards for the public.

AIs provide an alternative option to obtaining building regulations approval from a local authority and are qualified and experienced building control professionals who assist developers, designers, contractors and building owners achieve Building Regulations compliance on a wide variety of construction projects.

Important changes to AI’s cover:

The new policy wordings agreed by MHCLG contain some fixed dates in terms of changes to cover and how it operates, which will impact the contractual position of AIs simultaneously.

The key changes to cover are as follows:

Revision to definition of ‘The Business’
The Insurance Criteria only relates to the statutory obligations of an Approved Inspector. Therefore, the PI policy is structured to specifically cover only the liabilities arising from the statutory obligations of an Approved Inspector.

Fire Safety Notifications
As all AIs and other construction professionals will be aware, one of the major current concerns of insurers has been around ‘Fire Safety Notifications’ (FSNs), and the potential legacy exposures, particularly in relation to external cladding. Going forward, the cover applicable for FSNs on AI policies will be subject to inner limitation and an aggregate cap.

Contractual Liabilities
An exclusion in respect of Claims arising from contractual provisions that are more onerous than the industry standard ACAI/CIC approved ‘Contract for the Appointment of an Approved Inspector…’ will be introduced for contracts signed after 1st July 2021.

Third Party Contracts and Collateral Warranties.
An exclusion will apply in relation to Claims arising from Collateral Warranties or other Third-Party contracts signed after 1st July 2021.

If there is any aspect of this update that you would like to discuss, please get in touch with:

Tanya Winstanley | Professional Risks Director, Griffiths & Armour
twinstanley@griffithsandarmour.com