This case study is an anonymised composite based on publicly reported PI claim patterns. It is not actual Apex client data and does not constitute legal or insurance advice. Names, locations and identifying details have been changed. Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority, FRN 724952.
A twelve-architect practice in a major regional city, fee income around £3.8m, with a mixed portfolio of residential, commercial, education and healthcare projects. The practice held ARB and RIBA chartered status with a long-established reputation on mid-scale residential schemes.
The project was a 22-metre residential block of 64 apartments built by a regional developer between 2014 and 2016. The architect’s role was the lead designer on the scheme through to a Stage 4 technical design handover to the design-and-build contractor at which point the practice was novated under a standard JCT D&B novation. The specification included a rainscreen cladding system on the upper levels of the elevations with a metal composite material (MCM) panel on a ventilated cavity behind, an external wall insulation layer of mineral wool to most areas and PIR insulation in localised areas, and cavity barriers at compartment lines.
The specification document, produced at Stage 4, identified the cladding panel as “Type X or equivalent approved” — a brand-name reference with the standard “equivalent approved” language. The Type X panel as named had a Class 0 surface spread of flame rating but was not of “limited combustibility” within the meaning of the relevant Building Regulations Approved Document B at the relevant time. The specification did not require the panel to be of limited combustibility and did not specify a Euroclass A2 minimum.
Post-Grenfell, the relevant statutory and regulatory framework changed dramatically. The Hackitt Review and subsequent statutory changes culminating in the Building Safety Act 2022 placed materially heightened duties and retrospective scrutiny on the design and construction of higher-risk buildings, with a particular focus on external wall systems. The building, at 22 metres, fell within the higher-risk building (HRB) cohort and required a fire risk appraisal of its external wall (FRAEW) under PAS 9980.
The FRAEW concluded that the as-built cladding system did not satisfy the post-Grenfell standards and required remediation. Costs were estimated at approximately £4.2m for full cladding replacement and remediation of associated fire-stopping defects.
The freeholder, supported by the leaseholders’ representatives, brought a claim under the Defective Premises Act 1972 as amended by section 134 of the Building Safety Act 2022 — which extended the limitation period for DPA claims to 30 years for pre-completion defects (and 15 years for post-2022 defects). The claim was framed against the developer, the design and build contractor and the novated architect, with the architect’s exposure focused on the specification decision at Stage 4.
The principle in Hedley Byrne and the architect-specific authorities applied. The architect’s defence focused on three points: first, the specification met the regulatory standards prevailing at the date of design (the “design against the standards of the time” defence); second, the design was passed to the D&B contractor for technical development and any failure of the as-built system was the contractor’s responsibility under the novated contract; third, the practical impact of the Building Safety Act’s retrospective extension of limitation was a matter for legislative challenge rather than a matter on which the architect could fairly be made primarily liable.
The defence had some force. The application of Sweett v Michael Wilson Enterprises Ltd principles to the architect’s role in the design team, and the practical analysis of who bore design risk after novation, were live questions. The legislative landscape post-BSA 2022, however, materially expanded the realistic exposure horizon.
Pleaded loss against the architect was approximately £1.6m as the architect’s contribution; the eventual settlement after mediation was approximately £825,000.
Section 5 notification was made on receipt of the freeholder’s letter of claim. The wording in place at the time of notification responded — architects’ PI cover commonly responds to claims arising out of professional services regardless of when the original services were performed, subject to claims-made architecture and the firm’s retroactive date.
A material point arose on the retroactive date. The firm’s wording had a retroactive date of 2008. The specification work in question had been done in 2015, comfortably after the retroactive date. Had the work been older than the retroactive date, cover would not have responded — a point of substantial importance for any architectural practice with a long history.
A further point arose on fire safety exclusions. By the time of notification, the architects’ PI market had introduced fire safety exclusions on a substantial proportion of renewals, particularly for higher-risk buildings. The firm’s wording in place at notification did not contain a cladding-specific exclusion, having been negotiated carefully at the prior renewal with the broker’s intervention. The wording at the firm’s most recent renewal (post-claim) did contain a tighter cladding exclusion for ongoing work — illustrating the market’s directional movement.
The £5m limit was sufficient. The £35,000 excess applied. Defence costs sat in addition to limit. The matter settled at mediation at approximately £825,000 inclusive of the freeholder’s contribution to costs.
The settlement was paid. The firm undertook a structured review of its historic specifications on residential buildings — a substantial exercise covering approximately 30 projects over the relevant period. Approximately 40% required some form of post-Grenfell remediation engagement; in some of those cases the firm has been pulled into adversarial proceedings, in others the firm’s role has been a more constructive collaborative engagement with freeholders and contractors.
At renewal, the firm’s PI premium more than doubled. The renewal involved a careful negotiation around the scope of the cladding exclusion, the retroactive date and the run-off implications. The firm has materially restructured its residential-buildings practice, with a heightened risk-assessment process before accepting any new HRB instruction.
Cladding and fire-safety claims dominate the current architects’ PI market. First, the retroactive date on the firm’s wording is the single most important provision for a firm with historic residential work; it should be benchmarked at every renewal and held wherever possible. Second, the scope and language of any fire safety or cladding exclusion is now the substance of every architects’ PI renewal negotiation; the firm should understand exactly what is and is not covered, on past and ongoing work. Third, novated D&B arrangements do not relieve the architect of all design responsibility for the pre-novation work; the documentary evidence of the design decision and the scope at novation matters. Fourth, the Building Safety Act 2022 extension of limitation under the Defective Premises Act 1972 is the single most important legislative change for the architectural profession’s PI exposure in a generation; firms with historic residential portfolios should map the exposure systematically. Fifth, the firm’s specification language matters; “or equivalent approved” without a substantive minimum performance standard is the kind of language that has produced retrospective litigation.
For architects’ PI in the current market, the broker’s principal value is in the wording negotiation and the renewal narrative. We work with practices on the careful negotiation of retroactive dates, fire safety exclusion scope and run-off architecture — three issues that, in our experience, separate manageable renewals from punitive ones. On notification, the framing of cladding-related notifications under the wording requires care; the cladding exclusion language varies substantially across markets, and the precise wording of the notification can affect cover. At renewal, the firm’s exposure-mapping work on its historic residential book, supported by the practical PAS 9980 engagement evidence, is the documentation that earns the underwriter’s confidence.
Apex Insurance Brokers serves UK professional services firms and commercial businesses. Call 0117 325 0027, email hello@apexinsurancebrokers.co.uk, or request a quotation.
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