Protecting your business

Is now the time to celebrate Insurance risks?

We are sure there are many of you wanting to celebrate the beginning of a new year and the end of a particularly troubling one. News of the approval of the vaccine in the United Kingdom gives us all hope for a Covid-19 free 2021!

One thing to celebrate this year has been the resilience of the construction sector. BRIC is heavily involved in the domestic building sector and we have seen substantial increases in the volume of works in Victoria and New South Wales during the year. This is despite severe restrictions as to site capacities and workforce mobility.

Also interesting is that Covid-19 did not interrupt the machinations of government with two significant pieces of building legislation arriving in NSW during the year, namely the Design and Building Practitioners Act (NSW) 2020 (“D&BP Act”) and amendments to the Building and Development Certifiers Act (NSW) 2018 (“B&DC Act”).

From an insurance perspective the two pieces of legislation are quite different. The B&DC Act follows the path of most legislators throughout Australia in that it is quite specific regarding the type of insurance, The legislation has been designed to rectify systemic problems in the NSW building industry, however we believe this provision leaves open the possibility that many consumers will continue to be exposed to unscrupulous building practitioners/engineers, bringing the professions into disrepute.

the quantum of the limit of liability and what aspects of cover can be excluded. This generates frequent discussion with NSW regulators in determining the compliance of a policy. This is positive as this level of regulator diligence is not applied in other jurisdictions in Australia. At the end of the day such stringent requirements for insurance and the rigour of the regulators reinforces the importance of the insurance as a consumer protection measure.

By contrast the D&BP Act is very different. This act addresses specific insurance requirements for professional engineers and building practitioners (Insured). The regulations under this act define what insurance is required. Whilst the regulations are still only in draft form and are open for public consultation, they simply require the professional indemnity policy insure all the liabilities of an Insured since they first became registered.

What is then of considerable concern to us is that the proposed regulations allow each Insured to determine their own level of insurance to be adequately covered. There are no minimum requirements and the determination will apply to the limit of liability, the excess and the scope of cover provided.

Whilst many Insureds will act prudently to protect their assets and provide a reasonable level of consumer protection, others will simply race to the bottom purchasing, the cheapest policy, lowest limit and exclusion riddled coverage.

Most in the engineering profession will ensure they comply with the highest standards expected of a professional, taking responsibility for their actions and purchasing significant limits in their insurance and the broadest level of coverage. However, they will continue to be dismayed by those who undercut their pricing and continue to cut corners in their professional practice including when it comes to the procurement of insurance.

The legislation has been designed to rectify systemic problems in the NSW building industry, however we believe this provision leaves open the possibility that many consumers will continue to be exposed to unscrupulous building practitioners/engineers, bringing the professions into disrepute.

Most in the engineering profession will ensure they comply with the highest standards expected of a professional, taking responsibility for their actions and purchasing significant limits in their insurance and the broadest level of coverage. However, they will continue to be dismayed by those who undercut their pricing and continue to cut corners in their professional practice including when it comes to the procurement of insurance.

Without a legal minimum level of cover, consumer protection will be eroded, and the ability of practitioners to exist on a level playing field will be diminished.

Insurers are also concerned regarding the introduction of a Statutory Duty of Care in the D&BP Act. Whilst premiums can cater for future works, the legislation applies retrospectively, creating a totally unknown risk that is extremely difficult for insurers to quantify.

This is resulting in blanket exclusions appearing in policies that remove any cover for liability which is only created by this new Statutory Duty of Care.

Whilst the approach of Christmas, a new year and the introduction of a Covid-19 vaccine is cause for celebration, we are unable to say the same about this new legislation.

Should you desire assistance to secure your professional indemnity insurance, please call 1800 077 933.

Chris Bovill BRIC

To the extent that any of the above content constitutes advice, it is general advice without reference to your needs or objectives and therefore cannot be relied upon. Before acting on the above information you should obtain advice specific to your needs.

Chris Bovill is the founder and Managing Director of Bovill Risk & Insurance Consultants Pty Ltd (BRIC) and has been arranging professional indemnity insurance for engineers since 1994. BRIC are specialist professional indemnity insurance brokers who have arranged PI insurance for thousands of engineers.

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That's why Consult Australia has partnered with brokers that we are confident really understand our industry and will also provide our members a level of service that we would be happy to endorse. Bovill Risk IC and Planned Insurance have partnered with us for over ten years, and continue to help Consult Australia members find their way through the insurance forest for insurance and across your business insurance needs. Contact our partner brokers now to see how they can help your business.

Bovill Risk & Insurance ConsultantsChris Bovill, Managing Director www.bric.com.auPO BOX 1020

Richmond North Victoria 3121 1800 077 933 bw@bric.com.au

Protecting Professionals

Planned Cover Simon Gray, State Manager www.plannedcover.com.auPO Box 1983, North Sydney New South Wales, 2059 1800 077 933 sydney@plannedcover.com.au