Cladding crisis sparks PI exclusions, premium rises

Building surveyors have been hit with professional indemnity policy exclusions and premium rises at the mid-year renewals, as insurers tighten policies following cladding-fuelled apartment fires. The Australian Institute of Building Surveyors (AIBS) says practitioners in most jurisdictions are legally required to have insurance for roles ensuring buildings meet national and state codes. “Building surveyors or firms unable to obtain policies without exclusions may not be able to fulfil statutory requirements for registration,” CEO Brett Mace says. He says insurers’ response to the cladding issue is “knee-jerk” and “will achieve very little other than to potentially cause chaos in the building industry and threaten the livelihood of some industry professionals”. Many building surveyors have seen premiums double, while increases at the top end of the market, where cladding exposure is greatest, have been up to 400%. AIBS National VP Wayne Liddy says exclusions around cladding and non-conforming products are “extremely onerous” and the situation is complicated by different state arrangements and slow government responses to calls for action. “We believe there has to be a nationally consistent approach to the cladding issue and the non-conforming products issue,” he told “Everyone is deflecting, rather than taking some responsibility.” Bovill Risk & Insurance Consultants Broking Manager Darren Pavic says it is still possible to source policies without exclusions, but it became increasingly challenging over the past year. “Premiums are increasing significantly,” he said. “The biggest impact has been felt by those firms that have been effectively forced to change insurer to remain compliant with their statutory obligations.” Some surveyors have taken the policies on offer to continue trading, even though exclusions are involved that could leave them in breach of legislation and exposed to claims. “On a daily basis we are coming across policies that contain onerous cladding or non-compliant building materials exclusions that have been arranged by other brokers for building surveyors, engineers, architects and other construction professionals,” Mr Pavic told “If general [insurance] brokers are not able to source compliant insurance, they should refer their clients to others with requisite expertise, rather than expose their clients and themselves to unnecessary risk.”  

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