Contingent Liability: EWS1 Professional Indemnity Insurance Scheme

On 10 February 2021, the Department announced a Government-backed professional indemnity insurance (PII) scheme for competent fire safety professionals undertaking EWS1 assessments.

Today, I am very pleased to announce that under new arrangements, we will provide state-backing to a selected insurer who will be administering insurance policies to qualified professionals. The scheme will launch in September 2022, enabling competent professionals to access the indemnity cover they need to undertake external wall assessments.

To offer EWS1 professional indemnity insurance to competent assessors, my department must accept an unlimited contingent liability, with the Government Actuary’s Department (GAD) making a best estimate of expected losses as circa £100 million.

The contingent liability being claimed is unlimited because there is no theoretical cap on the size of claims that could be made. However, the risk is limited by the number of buildings, and number of EWS1 assessments. To further mitigate this risk, we will only be offering professional indemnity insurance cover for accredited professionals who have the requisite training, expertise and knowledge to undertake the EWS1 assessment. In addition, completed EWS1 assessments will be subject to an audit process to ensure they are being completed accurately with due process being followed.

The cost of the scheme, including the expected losses, will be offset in full through premiums: EWS1 assessors will be required to purchase PII policies for any EWS1 assessments they complete, with the funds gathered being accumulated and subsequently used to pay out any insurance claims successfully made against the assessors. In this way, the scheme will operate as fiscally neutral for Government.

The Treasury has approved the proposal. My department will keep Parliament informed of any expected changes to this contingent liability on a regular basis.

A departmental minute has been laid in the House of Commons providing more detail on this contingent liability.

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