Building firms have seen their professional indemnity (PI) insurance bill slashed by up to a fifth over the past year, research has revealed.
A report by insurance broker Gallagher found that “well-performing” contractors and consultants had seen average premium reductions of 15 to 20 per cent from the first half of 2025 to the same period in 2026.
Since the Grenfell Tower tragedy nine years ago, many contractors have found PI insurance difficult to obtain, or watched their premiums soar.
Responding to a 2021 survey by the Construction Leadership Council, almost a third of contractors, consultants and specialists said they had lost out on jobs because they were unable to obtain adequate PI insurance.
There were fears that the Building Safety Act could spark another crisis in this area.
But Gallagher’s Construction Insurance Mid-year Update report, published today (3 August), found that the situation had continued to ease.
“Strong insurer profitability, sustained capacity and competitive dynamics have supported meaningful rate reductions and a continued, if measured, broadening of cover for future-facing risks,” said the study.
However, it added: “Insurer focus remains selective in key areas. In H1 2026, underwriting attention has centred on structural integrity exposure, particularly for concrete transfer slabs, alongside renewed scrutiny of supply chain PI resilience.”
The report also looked at trends in the way PI premiums were being set.
“Pricing outcomes remain increasingly differentiated by governance and risk quality rather than scale alone, with insurers placing greater emphasis on technical oversight, design management and financial resilience,” it said.
Looking ahead, Gallagher outlined the potential for further good news.
“Current conditions suggest construction PI market conditions may continue to improve, subject to capacity, claims trends and insurer appetite, underpinned by sustained capacity, competitive renewal dynamics and disciplined underwriting focused on specific technical risks rather than broad market restriction.”
Looking more broadly at the construction insurance market, Gallagher noted that many insurers had reported better results for 2025, raising hopes of a “selective growth appetite” this year.
“Much of the new capacity entering the market in 2025 is now fully mobilised, with a clear underwriting strategy for 2026 to grow market share,” added the report.
“Some have entered with a target of growth by deploying ‘follow’ participation behind recognised established lead markets in their early years, while others have started with a clear aspiration to lead business and have resourced accordingly.
“Additional entrants may emerge during the remainder of the year, depending on market conditions.”
