Construction firms urged not to cut back on PI

09/06/2009

Written by Professions Division

Construction firms have been warned against cutting back on Professional Indemnity (PI) insurance as the financial crisis rumbles on, it has been reported.

Research carried out by New Civil Engineer in association with an international insurance broker reveals that more than half (56 per cent) of architectural, construction and engineering firms have seen a rise in the number of claims filed against them, with some 25 per cent stating that the size of such litigation is increasing.

However, the study suggests that in spite of such rises, as the economic downturn continues many are putting themselves at even greater risk, as a third of respondents do not have written risk management procedures in place.

The insurance broker claims that while it may be tempting for firms to cut back on PI insurance, doing so could leave them susceptible to legal action as "litigation tends to increase during recessions as businesses look for ways to avoid payment".

Meanwhile, one industry expert claimed in March that the deteriorating economic situation has seen the number of PI claims filed against architects rise by 90 per cent over the previous 12-month period.

Professions Division, Associate Director at PYV, commented: "This is certainly a time when firms of this type should be looking to protect themselves further, rather than cutting back - this really is a false economy, because the proliferation of claims (even spurious ones) without adequate protection will clearly lead to much more serious financial difficulties."

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PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

(c) 2009 Adfero Ltd.

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