Importance of PI and an introduction to the Building Safety Act 2022

Answer

If someone were to describe themselves as a 'PI' lawyer, a lay person would be forgiven for thinking that they spent their days dealing with claimants being injured in a number of different ways, from simple whiplash claims to catastrophic traumatic brain injuries and even death. But those in the professional sphere will understand 'PI' as a completely separate area to personal injury work: professional indemnity.

Professional indemnity insurance

Professional indemnity insurance (PII) is a type of business insurance that affords protection for professionals who provide advice or services to clients as part of their occupation. It’s an absolute necessity for professionals such as solicitors and barristers to carry out their work, but the legal sphere isn’t the only sector that uses PII to protect themselves against the cost of compensating a client for any mistakes made in services rendered. Many other professionals are also required by their regulators to take out PII policies, such as architects, surveyors, accountants and financial advisers. PII policies also serve to protect clients against negligent advice from a professional or a failure to adequately provide services for which they were instructed.

As a result, PII is a huge part of the insurance market, and affects millions of people in their daily work lives. The estimated premium value of the UK PI market is currently £3 billion in a chain that includes brokers, insurers, underwriters, solicitors and barristers. Within certain professions, there are also higher risk areas of work that make up the majority of professional negligence claims, such as medical malpractice (medical), conveyancing (legal), taxation (accountancy), investment/miss-selling (financial services), valuation (property) and design (construction). While PII is an important safety net for professionals, it’s crucial to note that it doesn’t protect against intentional wrongdoing or criminal acts.

Even if you don’t plan on practising PI law, if you envisage a career in any profession, it’s important to be aware of what PI is and how it works. PII is used as a risk management tool by professionals alike. One such industry in which PII is extremely important is the construction industry. This is because it’s not only about identifying potential risks, but also having in place appropriate measures to mitigate such risks.

Building Safety Act 2022

The Building Safety Act 2022 (BSA) came about as a direct result of recommended reforms to the construction industry in the wake of the Grenfell Tower tragedy in 2017. It’s the most significant reform to the construction industry in recent years. As a piece of primary legislation, it creates a legal framework for the changes to take effect and makes way for a number of secondary legislations to follow in the coming months and years. It makes radical changes, offering property owners more rights and protections, and completely overhauls the construction industry’s existing regulations, ensuring that our buildings are overall safer.

Some of the biggest changes contained in the BSA are the establishment of new duty holders and their respective responsibilities, insisting that these duty holders must hold the relevant competencies required for compliance. This means that throughout the supply chain, everyone has a duty to comply with specific requirements and to communicate and cooperate with one another towards a common goal. Prior to the BSA coming into force, the construction process was very disjointed. However, with the introduction of new building control systems, it’s now much more sensible as all aspects of the build must be registered and approved before any ground can be broken and construction can begin. Ultimately, the regulator will require evidence that the project complies with all safety requirements and is likely to be managed correctly. Another novel addition from the BSA is the ‘golden thread of information’ for higher-risk building projects (which in England is any occupied building at least 18 metres high or with at least seven storeys and containing at least two residential units). In a new digital age, the ‘golden thread of information’ requires that all building information is kept securely and digitally in a single file that’s presented in a way that people can easily use, refer to and is available at any time to enable someone to do a job that’s connected with the building project. This essentially creates a mandatory file management system whereby everyone is working from the same basic information. This makes the entire process more efficient and less likely to be subject to basic oversight errors.

One may expect the BSA’s introduction to lead to a decrease in PI claims in the construction sector due to the process being much more of a cohesive project rather than piecemeal as it’s been for so long. This, however, may not necessarily be the case. This is because, in addition to bringing all aspects of the build together, the BSA also makes changes to the Defective Premises Act 1972 (DPA) by extending limitation periods. Prior to the BSA coming into force, claims under section one DPA, which relate to “work for or in connection with the provision of a dwelling”, were limited to a period of six years. The position now, however, is that there’s a new 30-year limitation period going back in respect of work completed before 28 June 2022. This means that an extremely wide range of potential claims, that would have been statute barred, are now able to be litigated. Similarly, under section 2 DPA, a new cause of action has been introduced, which means that “any person in the course of a business who takes on work in relation to any part of a relevant building completed on or after 28 June 2022” will have a 15-year limitation period going forward.

The BSA signifies a pivotal moment for the construction industry, placing enormous weight on building safety transparency, and accountability. It has very wide-ranging implications for several professions, not least of which those involved in the design and build industry, but also residential and commercial conveyancing, transactional property and property dispute lawyers. This is in a variety of ways and both once a relevant building has been built and in relation to existing occupied residential or mixed-use buildings. With all the secondary legislation following the BSA coming through hot and fast, this is certainly an area of law to watch.

Verity Wilson is a trainee solicitor at DWF Group Limited.