Is it a hard market for PI insurance?

05 March 2018

Fifteen years of affordable, abundant professional indemnity (PI) insurance capacity could soon be coming to an end for design and construct (D&C) contractors.

The professional activities undertaken by D&C contractors (those normally undertaken by construction professionals: designers, engineers, architects) are attracting higher premiums and reduced coverage due to catastrophic hits on insurers’ balance sheets.

Eye-watering insurance claims in recent years have decimated insurers’ reserves. Extreme events in the general insurance market, such as hurricanes in the Gulf of Mexico and PI specific issues such as huge claims on waste-to-energy plants, have combined with other losses to cause significant damage to insurers’ confidence in this class of insurance.


A hard market is predicted by some commentators, meaning that prices could be on the rise and coverage restricted. We are starting to see firm evidence of these two outcomes, with some insurers withdrawing from the market altogether. The last hard market arose in 2001, following the September 11 terrorist attacks and the earlier insolvency of Independent Insurance. However, the market has been softening since early 2003, leading to broad coverage and premium reductions, driven by a surplus of competing insurers.

Many PI customers have grown used to this extended soft market – it might be the only market conditions they have known. A hardening market can have huge implications on premiums and coverage and businesses should be aware of this as their 2018 renewals approach.


This paper explores the background to the current market conditions and the implications of a hard market on construction companies and their PI cover. Additionally, it examines practical steps construction businesses can take to obtain the most effective cover, at the best prices, should the market harden.


  • What are the characteristics of PI cover
  • What is a hard market
  • What could cause the market to harden in 2018
  • How could your PI insurance be affected by a hard market
  • How can you maintain wide and affordable coverage.

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For further information, please contact Andrew Harrison-Sleap, Project Solutions Team Head on +44 (0)20 7528 4711