PPIR: Addressing Liability & Insurance

in Engineering Practice

Allison GriceNational 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.

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.

Why is CGU Insurance Involved in PPIR?

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).

• Establishing a system for the accreditation of engineers as expert

witnesses and the acceptance of accredited experts in the legal and

dispute resolution spaces.

• 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.

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.”

• The lawyers and courts charged with determining the dispute have a range of

supposedly “expert” engineers each offering a different “expert opinion.”

• Every party with an interest in pointing the finger of blame at the engineer can find an

engineering “expert” to support their position.

• There is uncertainty or misunderstanding about the scope of the engineering services

the parties intended to be provided.

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.

With PPIR …

National Adoption of PPIR

• guidance about the nature and extent of their duties • certainty about standards of practice against which professional conduct will be assessed.

• greater comfort about management of risk and assessment of liability

• making engineering risks more attractive to insurers; reducing cost of PI insurance

Engineers

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

- would give

• The loss experience for engineering professions should drastically improve

making them much better and more attractive risks for insurers.

How will PPIR affect PI Insurance for Engineers?

• 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.

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.

Role & Objectives of the PPIR Liability Project Team