PPIR: Addressing Liability & Insurance in Engineering Practice Allison Grice National Manager, Long Tail Claims CGU Insurance CGU is a leading professional indemnity insurer of a broad range of professional service providers, including engineers in a wide variety of engineering disciplines. Why is CGU Insurance Involved in PPIR? It is critically important to CGU, other professional indemnity insurers and those who deal with the professional conduct of engineers, that industry guidelines and standards which benchmark the professional performance, and assessment of performance, of engineers, are spelt out and adopted in the legal and insurance sectors in which the liability of engineers is contracted, and determined when disputes arise. Why is CGU Insurance Involved in PPIR? Certainty around the way engineers provide their services and how their liability is assessed and insured benefits: Engineers. The recipients of engineers’ professional services. Those in the wider context who are impacted by the professional services provided by engineers, including insurers. The front end of professional practice: Clearly defining the roles and responsibilities of engineers in their commercial relationships to minimise the scope for contractual disputes; and The dispute resolution end of professional practice: Having a defined framework clearly setting out the key aspects of engineering performance against which the duty and standard of care of the professional engineer can be assessed by all of the different interests involved in that process. Key Liability and Insurance Challenges • Establishing benchmark standards for the professional performance, and assessment of performance, of engineers (which PPIR does). • Having a professional performance guidance framework for engineers accepted by the engineering, legal and insurance sectors to clarify, simplify and standardise engineering performance in practice. • Establishing a system for the accreditation of engineers as expert witnesses and the acceptance of accredited experts in the legal and dispute resolution spaces. Benefits of PPIR • Considerations which contracts for the provision of engineering services should cover but often don’t. • “A good contract is good insurance.” • A clear, concise framework of guidelines which embody good engineering practice against which engineers’ professional performance can be measured and assessed by: • Engineers. • The legal profession in dealing with disputes about engineering performance. • By insurers who underwrite engineers’ professional performance. Currently… • The underlying commercial contract often doesn’t cover key aspects of the engineering task – “it’s not all there.” • There is uncertainty or misunderstanding about the scope of the engineering services the parties intended to be provided. • Every party with an interest in pointing the finger of blame at the engineer can find an engineering “expert” to support their position. • The lawyers and courts charged with determining the dispute have a range of supposedly “expert” engineers each offering a different “expert opinion.” With PPIR … Managing the exposure of engineers to legal liability arising from the provision of their professional services is a central focus of: • The profession. • The recipients of engineering services. • The legal system; and • The professional indemnity insurers of engineers. Engineers would benefit enormously from better definition of benchmark engineering practice, which the PPIR Protocol delivers. National Adoption of PPIR - would give Engineers • guidance about the nature and extent of their duties • certainty about standards of practice against which professional conduct will be assessed. Legal system • performance framework for assessment of liability and resolution of disputes • by reference to the opinions of accredited expert engineers and the Protocol. Insurance industry • greater comfort about management of risk and assessment of liability • making engineering risks more attractive to insurers; reducing cost of PI insurance How will PPIR affect PI Insurance for Engineers? • The loss experience for engineering professions should drastically improve making them much better and more attractive risks for insurers. • Insurers will be able to better manage risk by insuring engineering practices which comply with the PPIR Protocol guidelines. • The resolution of legal disputes involving engineers will be much more certain and consistent by reference to the PPIR Protocol guidelines and the truly expert opinions of engineers accredited as experts against them. Role & Objectives of the PPIR Liability Project Team To build a team of key representatives of the engineering, insurance, legal and judicial industries who will be most influential in bringing about national adoption and implementation of the PPIR Protocol.