Written by: Griffiths & Armour on: 23 Jul 2021
Professional Indemnity Insurance and Risk feature prominently at ACEI Annual Conference
Overcoming the challenge of operating remotely, the Association of Consulting Engineers of Ireland (ACEI) delivered a very successful annual conference that was both insightful and thought provoking. The theme of this year’s conference was ‘Delivery where the only constant is change’, with a keynote address from Michael McGrath TD, Minister for Public Expenditure and Reform.
We were delighted to participate in the conference with Griffiths & Armour Director, Graeme Tinney, addressing delegates on the implementation of Project Ireland 2040, the National Development Plan, and the risk -v- reward balance for the construction sector. In his presentation, Graeme questioned the approach to risk on projects under previous National Development Plans and the possible influence this has had on the liability landscape for construction consultants.
The simple truth is that the risks being transferred to professionals are enormous and completely out of proportion to their ability to accept, manage and insure them. The strategy, he said, is predicated on the belief that the insurance market, and particularly Professional Indemnity (PI) insurers, will continue to underwrite the exposure but what happens when they won’t?
2020 saw the worst contraction in the PI insurance market for over 20 years with many firms struggling to source affordable and effective insurance solutions. There are a range of factors that have contributed to the difficulties, but we need to understand the impact of procurement practices and how decisions on the balance between risk and reward will influence insurer appetite. The perception amongst insurers is that there remains a ‘risk dumping’ mentality in the public and private sector and whilst in many areas ‘the only constant might be change’, when it comes to construction risk, we often seem determined to repeat the mistakes of the past.
Graeme spoke about the need for change being ‘a shared responsibility’. This is not just about procurement and there are challenges for the insurance and legal sectors to address. At the same time, he felt it reasonable to expect Government to be leading the way and delivering a fairer balance of risk and reward on public sector contracts.
He welcomed the Minister’s commitment to addressing some of the issues and felt it was encouraging that the Office of Government Procurement had brought together representatives of the insurance and construction sectors in November 2020. Griffiths & Armour were pleased to be invited to provide the opening address to that meeting and look forward to working with Government and other stakeholders in finding solutions to some of the challenges.
At the heart of Project Ireland 2040 and the National Development Plan is a desire to:
- Move away from the approach of the past;
- Adopt a well thought out and defined strategy; and
- Make Ireland a better country for all its people.
In closing, Graeme Tinney expressed his hope that it will also deliver a more equitable balance between risk and reward for the construction sector.
If you have any questions about the contents of this article, please get in touch with:
UK: Professional Risks Director
Ireland: Europe DAC Chief Executive Officer