Professional Indemnity Insurance for the Engineering Sector has been challenging for the past few years and in the last 6 months become even tougher.

The level and frequency of Claims for any Insurer will dictate their ability to offer Professional Indemnity.

Currently ALL Insurers are looking closely at whether they are able to continue supporting their engineering risk, whether these be geotechnical, structural, or other engineers.

The desired result (if they continue to support the engineering sector) is to recoup costs incurred from previous losses (claims).

The alternative to this is to withdraw from the market altogether. Currently, we are seeing a combination of both.

Summary of current market conditions:

  • Reduced Limit of Indemnity
    Previously Insurers were happy to provide up to $10,000,000 under one Policy. Unfortunately, with the current state of the market we are seeing a reduction the Limit from Insurers (still willing to write such risks).From our experience, the maximum currently being offered is $5,000,000, and in some cases, $2,000,000.Whilst this may not affect a number of Engineering firms, there are those they require a $10,000,000 – Limit of Indemnity. Fortunately, there are a number of markets that will offer terms on an Excess Layer basis. Essentially, Excess Layer Insurance is an additional layer of cover which sits on top of the Primary Layer Policy.
  • Premium Increasing
    Premium(s) continue to increase, some doubling from the previous year. This can have a significant impact to a Business’ “bottom line” especially when the Insurance Cost (premium) can represent as much as 10% of the overall annual turnover.
  • Increased Policy Deductible(s) / Excesses
    Policy Deductible(s) / Excesses also increasing, with $10,000 being the minimum premium applied by some Insurers.

For those Insurers that are still in the market, they are reducing their capacity (for some specific engineering disciplines) and / or are requesting more information before they consider offering Professional Indemnity Insurance terms.

It can’t be argued that the immediate future for Professional Indemnity Insurance for Engineering Community will be continue to be challenging.

To ensure you are best placed to obtain the most favourable Professional Indemnity Insurance possible it is imperative that you are able to clearly demonstrate and convey your technical expertise, good management, and excellent standing in your field of engineering.

With access to an array of markets worldwide, there are still a number of options available for Engineers Professional Indemnity Insurance, however, this number is diminishing.

To position yourself to achieve the best possible Professional Indemnity Insurance an Insurance Broker will be your advocate to ensure you get the best fit Insurance for your needs, whatever the market conditions are.

An Insurance Broker will work to present the best “story” of your risk to help achieve the best outcome for your company.


By Tim Plummer