Internal Affairs

Information meeting on Professional Indemnity Insurance

Notes of the meeting held on 18th January 2007

Present:

Insurance
Michel Grange, MAF President (France)
Jean-Francois Allard, MAF Director General (France)
Jacques Aron, AR-CO President, Belgium
Fulgencio Aviles Ingles, ASEMAS President, CSCAE Representative (Spain)
Jose Pradilla, ASEMAS (Spain)
Thomas Kowalke, AIA AG (Germany)
Maitre Pericard, Expert (afternoon only)
ACE
Jean-Francois Susini, ACE President
Kevin Fingleton, RIAI (Ireland)
John Graby, RIAI (Ireland)
Anton Bauch BAK (Germany)
Corinna Hartrampf (BAK (Germany)
Isabelle Moreau, CNOA (France)
Alison Carr, AR (UK)
Katarina Klepec, ZAPS (Slovenia)
Jan Ketelaer, FAB (Belgium)
Steve Daelman (FAB/CNOA (Belgium)
Ides Ramboer, CNOA (Belgium)
Ivan Sovicek, CCA (Croatia)
Tonu Laigu, EE (Estonia)
Pierre-Henri Schmutz, CSA (Switzerland)
Adrian Joyce, ACE Senior Adviser

1. Introduction

J.F. Susini briefly introduced the meeting saying that the intention was to take a wide ranging look at the issue of Insurance for Architects and in particular, the model used by Insurance Mutuals. He welcomed all participants and in particular, thanked the Insurance Mutuals for their willingness to be present for this exchange of views.
Following this brief welcome, the three Insurance Mutuals present, one from Belgium (AR-CO) , one from Spain (ASEMAS) and one from France (MAF), presented the general statistics of the number of architects insured by them, the number of claims made and the average costs of such claims. A particular characteristic of these companies is that their Administrative Boards are generally made up of practising architects and they have a very close relationship with the Chamber or Order of Architects meaning that they are very well informed of the point of view of the practising professional. Furthermore, each of the Mutuals are involved in the schools of architecture where they inform and train student architects in matters relating to professional practice.
The power point presentations made at the meeting are appended to these notes so that the statistics for each of these companies can be read.

2. European Aspects

Following the presentation of the individual companies, the meeting was informed that a limited liability company known as EUROMAF was created in the year 2000 with the French and Spanish mutual companies being the shareholders of this new company. They have a staff of 11 and they are currently working in Germany, Austria, Spain, Belgium and Luxembourg. The company is interested in expanding its market and in working more widely across Europe and so this exchange of views with practising architects for a wide number of countries is expected to be fruitful for them.
There was a debate about the type of insurance cover that is provided, as there are two principal aspects to insurance cover in the architectural profession. The first relates to defects liability or damage to the works and the second relates to the intellectual services provided by the architect - a more in tangible type of cover. It was stated that one of the most important aspects of the costs of Insurance is whether or not there is a presumption of culpability in the country and in the laws of the country or whether culpability has to be proved. Furthermore an important factor is whether or not premiums are paid on an annual basis to cover an ongoing liability or whether there is a determined period of cover such as 10 years which is paid for on completion of a project as a lump sum. A further aspect is a question of whether the regulations of a country permit or require an in solidum approach to Insurance whereby each and every participant in a project may be liable for the work of the other persons.
The debate in the meeting was centred around by the table produced for the Belgian Order of Architects by a Belgian Company known as CEA. For the most part this table is accurate but it only covers the EU-15 countries.
Decision
The Group of persons present agreed that it would be very beneficial to complete the CEA Chart to cover all 27 EU Member States and they undertook to find a means by which this can be undertaken.
At this stage the extend of the mission of the architect within each country was raised as being a factor of significant importance that must be included in any comparative analysis of insurance covered.

3. Types of Insurance

There was a debate of the different approaches and types of insurance with the Mutuals reporting that from their point of view it is insurance of the person that they favour not insurance of the object. At this point the study by GAIPEC from the early 1990s was referred to. In that study which the general consensus was that a term insurance of the object was the most appropriate approach for the industry. Nevertheless It seems that, at the time, the construction companies were not in favour of such an approach but that there are indications that this might now be changing. It was acknowledged that all forms of insurance are evolving as society seeks to provide better protection to the consumer and user of services. In fact, the Services Directive that has recently been published in the Official Journal is the main driver towards the need for a debate at European level and it uses this principle of protection of the consumer as its main motivation.
A debate on whether or not a new type of insurance policy could be devised in which there are a number of clauses which are common to all countries accompanied by specific clauses which have to be purchased in addition to the basis clauses in order to work in various countries. Such a policy could be flexible and could bring down the costs of insurance for architects seeking to work in another country of the EU. This idea was received with some interest.

4. Presentation by Maitre Pericard on SIM and ROME I

A session of the meeting was taken up with a presentation by Maitre Pericard on the complex relationship between the new SIM Directive and the Community regulation in preparation known as ROME I that deals with private company law and the choice of law for contracts. He referred to the SIM Directive saying that Articles 3, 16 and 23 where the Articles of most interest to this topic.
He reported that the SIM Directive basically permits a provider to work with the laws of their country of origin whereas the ROME I permits choice of law and has a prejudice for the law of the country where the constructed work is located to be applied. He advised that the ACE and the Mutuals might wish to look at this conflict and possibly propose amendments to the ROME I regulation as it is still in the Co decision process.
There was a lengthy debate in which the participants sought to get clarification on the diverse impacts of the various Articles and provisions of the SIM Directive and the ROME I Regulation as they relate to the insurance of architects. At the end of the debate, it was clear that further analysis would be required in order to properly identify these differences.
The presentation made by Maitre Pericard is appended to these Notes.

5. Conclusions

At the end of the meeting it was decided that the following actions should be taken:
- A Joint Working Group between the ACE and the Insurance Mutuals should be established under the leadership of Jan Ketelaer of the ACE.
- The ROME I Regulation should be studied for its impact on the topics considered and a decision on whether amendments should be proposed should be taken in a relatively short timeframe.
- A second meeting of the Group should take place in the near future so as to frame the work and analyse the ROME I Regulation.
In a roundtable call the ARB, the RIAI, the BAK, the RIBA, the CNOA (B), the MAF, the AR-CO and the ASEMAS all agree to take part in the Joint Working Group.
End of Notes

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