Two insurance companies have joined forces to create a specialized professional indemnity insurance program aimed at helping small and medium-sized architectural firms reduce their premiums by up to 20 percent. Prospect Mutual Management and Sanctuary Insurance Brokers announced the launch of the Architects Insurance Scheme (AIS), with the ultimate goal of establishing a mutual insurance society owned by the architects themselves.
The new initiative comes at a critical time for the architectural industry, as legal experts have warned that a recent Supreme Court ruling has increased the need for comprehensive professional indemnity coverage. The ruling interpreted key elements of legislation, including the Building Safety Act 2022, making adequate insurance coverage even more essential for architectural practices.
However, the insurance market has become increasingly challenging for architects since the Grenfell Tower tragedy. Premiums have risen significantly while coverage exclusions have expanded, creating financial strain that has been cited as a factor in company closures and professional conduct hearings. The rising costs have put many architectural firms in a difficult position of paying more for less comprehensive coverage.
The developers of AIS explained that their product was created in direct response to concerns shared by architectural practices. "Professional indemnity insurance had become expensive, restrictive and out of step with how modern firms actually work," they stated. "Practices were paying more but getting less with exclusions they couldn't challenge and claims processes that felt one-sided. We built AIS to offer something better."
The new scheme provides tailored coverage that reflects the realities of modern architectural work. According to Prospect and Sanctuary, their product covers legal costs and expenses for defending claims, as well as compensation for financial losses resulting from errors, omissions, or negligence in delivering professional services. The coverage was designed with input from architects and is backed by experienced brokers.
Rikul Patel, head of mutual management at Prospect, revealed that hundreds of design firms are already examining the scheme. While the program is still in its early stages, it could evolve into a full mutual within two years. "The entire focus of a mutual is to reduce the level of profit taken out by others," Patel explained. "They are there for people who are risk aware and willing to operate in line with legislation and focus on training and development."
Patel emphasized the advantages of the mutual model, noting that such organizations can pay claims that traditional insurance companies might not cover. "The people managing the claims understand the issues you face," he said. "And any surplus has to be used for the benefit of the members. The AIS is an incubator; we expect it to be a year or two before we can launch the mutual. In the meantime we aim to offer a 20 percent reduction on expiring terms, when comparing apples with apples."
The importance of maintaining professional indemnity insurance was recently highlighted when the Architects Registration Board issued a penalty order to a 75-year-old architect for failing to obtain coverage before undertaking work on an extension. This case underscores the regulatory requirement for architects to maintain appropriate insurance coverage throughout their practice.
