10 December 2019

The PI market has become severe for construction professionals with increased claims activity and several large settlements and court judgments.

Construction professionals exposed to cladding claims have been the most heavily impacted, as cladding circumstances and claims continue to be notified to insurers. Having said that, we suspect that it will be many years before we will know how many of these cladding notifications will result in claims being made against architects. This is a “watch this space” scenario and we will not know the gravity of the situation for some time yet. In the next 12 to 24 months as many of the cladding notifications become claims, the insurance environment will worsen for certain construction professionals.

Specifically, in relation to architects, the other issue we are seeing is their referral to state-based Architects Registration Boards in respect to cladding matters. The allegations being made are that architects were careless or incompetent in their practice as an architect and that they were guilty of unprofessional conduct in that they did not ensure that adequate and independent consideration was given to the specification of the external wall details for buildings.

We also continue to see other types of claims being made against architects involving building defects, water ingress and personal injury matters. A significant contributor to these claims is the substitution of products by builders. This is a timely reminder that where an architect has properly researched a product before specifying it, legitimate reasons are required for it to be substituted. Substituted products must be checked with the same diligence as the originally specified product. The only legitimate reasons for a substitution are that the product is available sooner or is less expensive yet still meets or exceeds the requirements of the original specification.

Adele Monaco
National Claims Manager