ARB publishes updated guidance on PII

On 1 November 2022, the ARB published some updated draft guidance on PII policies, setting out the insurance arrangements architects need in order to remain compliant with the Architect Code of Conduct. The guidance was updated to address the issues currently being faced by the UK’s architects in securing the insurance they need to protect themselves, namely the cladding crisis that followed the Grenfell Tower tragedy and other global economic factors. It was produced following research and engagement with the insurance market and professional bodies (which we commented on here and a report of its findings can be found here). The ARB is now asking for wider views before it is finalised and comes into force later this year.

Architects should consider the updated requirements of the guidance and comply with them, before the draft guidance becomes finalised. The updates mean that:

• It will remain the case that architects should have adequate insurance before undertaking any work;
• Coverage for certain types of claims, including fire-safety, cladding, asbestos and pollution, can be held on an aggregate basis and limited to covering direct losses;
  • Although note that such restrictions should only be accepted where there is no alternative after architects have taken all reasonable steps to find comprehensive cover. Architects may need to demonstrate why paying for more comprehensive cover wasn’t viable for their business and upon each renewal should take all reasonable steps to ascertain whether they are able to remove any such limitations on the policy, and be able to evidence that they have taken those steps.
• It will not be a matter of misconduct if an architect cannot acquire retrospective insurance to cover historic liabilities, because of new exclusions applied to their policy;
  • Although note architects should notify their clients without delay and write to the ARB to explain the circumstances of their non-insurance.
• No architect should accept a minimum level of cover below £250,000.

An architect who has acted in accordance with the Code of Conduct and Practice and the new PII guidance published by the ARB, but had elements of their insurance removed because insurers no longer offer that cover, will not face regulatory action because of it.

The full guidance, which can be found here, should help architects who are struggling to obtain cover in a very hard insurance market. In particular it would mean that they do not fall foul of the ARB rules as a result of unavoidable limitations of cover.

We also think that this will be a useful statement from a recognised body of the current state of play in the insurance market. We would encourage architects to refer to the updated ARB guidance when negotiating appointments going forward as it provides clear justification to request that insurance obligations reflect the limitations on cover currently available in relation to fire safety, cladding, asbestos and pollution. This will also be grounds for requesting that the architect’s liability in relation to such risks is limited to reflect the insurance cover available.