Professional Indemnity Insurance: Implications on the Building Control market

People within the building control market

With the repercussions of giants, Aedis Regulatory Services, going into liquidation still being felt, there is a fog of uncertainty as to how Approved Inspectors unsuccessfully renewing the Professional Indemnity Insurance could affect the Building Control market. Being such a prominent concern throughout the industry, this article aims to investigate this notion further.

Aedis aren’t the only Approved Inspectors who have disbanded in the past few months. Head Building Control have since gone into Liquidation, and Hampshire based Guy Shattock Analysis are no longer trading in the same form. Whilst some smaller AI’s have been engulfed, so to speak, by nationwide companies that can provide them with the cover needed, this might not be possible for the larger corporations. 

The liquidation of Aedis left hundreds of Surveyors across various levels without jobs; could a similar pattern follow as other nationwide AI’s come up for renewal? 

Building Control Market

Looking at what happened to the unfortunate number of Surveyors operating under Aedis, a few trends were apparent. Firstly, as a consultant working within the Building Control sector, I saw an instant increase of candidates on the market. Secondly, Local Governments begun receiving reversions from the AI; in effect, extending their already extensive workload. 

The outcomes of this meant:

–  Some Local Authorities were able to recruit permanently. 

–  Some Local Authorities, being overloaded with work, needed additional temporary staff. 

–  Some Approved Inspectors capitalised and grew their companies, bringing additional staff on board.

Let’s assume for a moment that these could be ongoing trends. Hypothetically, what would the implications of this have on the Building Control market? 

A long standing issue for Local Authorities has been attracting permanent staff. Often, wage brackets and bandings have prohibited Authorities from offering competitive packages in comparison to an AI. Nevertheless, when Aedis went into liquidation, there appeared to be a brief spike in applications for Building Control vacancies across some Local Authorities. This doesn’t mean that every Local Authority was successful in recruiting, but it certainly had a positive impact for a time. Unfortunately for the Local Authorities, this spike was largely temporary. As the dust settled, the market reverted back to normal. However, should further AI’s go into liquidation, there is the potential that it could have a longer lasting effect. 

When AI’s are no longer able to trade and operate in the same way, projects are reverted back to the Local Authorities. Many Local Authorities who had a large market share in their area were able to continue functioning as usual. Nevertheless, other Authorities were overloaded with reversions and therefore struggled.

Should similar trends continue, could it have an impact on the contract market? 

As previously discussed, hiring people on a permanent basis can be challenging for a Local Council. Moreover, because many candidates have a period of notice they need to work before starting, immediate availability of any candidate is unlikely. Some Authorities, who encountered a rise in workload, then had to bring on temporary staff to cover the additional demand.

Local Authorities have a duty to continually offer an effective service. Whilst there are some Local Authorities that aim to have a department full of permanent staff, if there is work that needs to be done, the service must take priority. Should there be an immediate need, bringing on contract staff is a good way to achieve stability within the department. If similar trends were to continue, it would be interesting to see how the liquidation of AIs would affect the scope of the contract market.

Permanent staff within the Building Control Market

What impact the closure of these AIs will have on the remaining AIs in the UK is still unclear. Whilst some believe that a role with an AI is no longer as secure as it once was, others argue that actually with less competition on the market, job security has actually increased. 

Some AI’s have managed to successfully renew their Professional Indemnity Insurance. Consequently, this has rid their current employees of any concerns and stands them in good stead in the marketplace. Many AI’s actually capitalised, taking advantage of the situation when Aedis went into liquidation; headhunting many of their best employees to join their own organisations.  As profit organisations, AI’s are often looking to grow their teams and expand their geographical reach; the demise of other AI’s could be a good chance for them to do so.

Although there is no definitive way to know exactly what the impact of these AIs going into liquidation will be on the sector in the long term; we are able to speculate on what both potential negative and positive outcomes will look like within the industry. Either way, with a wave of scepticism currently present across the market, it will be interesting to see how the sector will adapt and progress throughout the forthcoming months and years.

- By Will Burden -

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