ACE calls for "holistic approach" in response to OFT insurance report

The Association of Consulting Engineers (ACE) has called for a "more holistic approach" to the management and insurance of risks in its response to the Office of Fair Trading's (OFT) study into liability insurance.

ACE has pointed out to the OFT that the increases in professional indemnity insurance premiums and excesses over the past year have been of great concern to all affected professional groups, including architects, lawyers and engineering consultancy firms.

ACE legal director Nora Fung said: "Rises in premiums and excesses have been caused by a variety of factors; most importantly, by an increasingly risk-averse culture in the industry. We have suggested to the OFT that any study into the professional market needs to take into account this risk-averse culture."

The study asked for details of the current state of the PI market, details of rate rises, risk management practices and the reasons for rate increases.

The OFT also asked for suggestions for realistic long term solutions to current problems.

"We have strongly suggested to the OFT that clients in construction need to retain, manage and insure more of the risk," said Fung.

"Project insurance, as highlighted in the Strategic Forum's Accelerating Change report, also needs to be encouraged.

"Risk allocation on projects needs to be clearly defined but consultants should not be afraid of risk allocated to them. Risk can be good business for consultants when managed properly," she added.