Approved Inspector Insurance

The Approved Inspector market is coming under increasing scrutiny at the moment. Insurers are declining or at least delaying the provision of professional indemnity insurance for some companies.  We have already seen at least one Approved Inspector (AI) firm close and others having to give away hard-earned business to either Local Authority Building Control or to other Approved Inspectors because they are without insurance.  This insurance is necessary for the AI to be able to trade and without it, the genuine concern is that individuals employed by them, through no fault of their own, will be out of a job.

So why are insurers being slow to re-insure Approved Inspector organisations?  The Association of Consultant Approved Inspectors (ACAI) which represents many Approved Inspectors believes that it is because ‘Statutory regulations on professional indemnity and public liability insurance are currently excessively stringent. Which means many insurers are unwilling to provide cover for inspectors’.  So definitely the fault of the insurers’ regulator, or is it?

Andrew Harrison-Sleap, head of the construction professional indemnity business Marsh, was reported in the Architects Journal as saying that although the issues date back to the 2010 recession, insurers had become even more cautious since the Grenfell Tower fire in which 72 people died.  He mentioned rulings in other jurisdictions such as the Lacrosse housing block fire in Australia where the builder, architect, fire engineer, and building surveyor were held liable for damages totaling $5.7m.

Those who keep up with the news in this industry will be familiar with walls in Scottish schools collapsing, housing developments with no cavity barriers and fire stops in the walls and a multitude of other problems.  All of these buildings achieved the appropriate regulatory sign-off and in many cases would have received warranty certificates. So why do these problems still occur despite a regulatory system being in place?

Dame Judith Hackitt in her report on the building regulatory system, commissioned following Grenfell, reported that it ‘was a system not fit for purpose and that over the past 25 years there had been a general decline in quality standards’.  In an industry where architects, developers, and builders are ‘held to account’ by a regulator, who themselves are subject to competition for achieving compliance with the Building Regulations one could question the whole premise of the way the industry is organised.  If you have a building control surveyor perceived as being a bit difficult, well just get another one who will be less questioning.  When many Approved Inspectors need to demonstrate a profit and retain clients it could be reasonably argued that they are disincentivised from taking a firm line on compliance and enforcement.

Perhaps the insurance industry has now spotted this perceived conflict and that substandard buildings are being signed off by the cheapest most compliant bidder. They recognise the very real financial risk that this presents to them let alone the risks to the health and safety of people using those buildings.

How does this system protect the public?  Well, in short, it does not.  Therefore, isn’t it about time for a step-change where Chief Executives of construction companies stop paying themselves 9 figure bonuses (yes £100m which is more than the turnover of the top ten building control companies) and invest in a proper checking and inspection regime that can properly hold their builders to account? And also should we not be questioning the whole premise of a regulatory system that has been set up to promote competition?

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We oversee Building Control for many local councils based in the UK - with a focus on helping both individuals and larger companies to achieve great building results safely.

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We offer building control services that help you to adhere to UK building regulations - have a look at our guidance notes here for further help.