Insight

Top claims risks facing architects in 2025

Published

12 March 2025

Read time

5 minutes

The construction industry is constantly changing due to economic and legislative changes, which ultimately results in challenges to architects both in relation to insurance and risk management. Therefore, we set out below what we consider will be the top five risks to architects in 2025 and the steps that can be taken to manage those risks. 

Building Safety Act and Principal Designer Role

Despite the Building Safety Act (BSA) now being in force since October 2023, it continues to have considerable impact on the construction industry. From our discussions with architect firms, the industry is still adapting to the new roles and obligations that the BSA has introduced – particularly with how these changes are applied in practice. 

One of the biggest changes is the introduction of the building safety regulator (BSR) and the introduction of the Gateway regime. The level of documentation that now needs to be provided by the design team at each Gateway is substantial, and approval must be received by the BSR before works on the project can continue. Since the introduction of the BSA, the BSR has been overwhelmed with the volume of applications at each Gateway. Unfortunately, it is our view that this demand is will only continue in 2025, and subsequently project delays are likely to remain a risk in the coming year. The BSR advises that it can take an estimated 8-12 weeks to obtain approval, although there are cases where delays have been up to 30 weeks.   

The delays are a result of the BSR not having the adequate resources to meet the demand. Also, as the industry adapts to the new golden thread standard, applications are being returned to firms as they are incomplete or missing adequate information.      

The delays have led to projects overrunning considerably, which can result in an increase in costs or contractors incurring penalties for late completion. Architects may start to see an increase in claims if firms have not factored in the potential delays to the programme with clients, or if their applications to the BSR are being rejected for missing required information. To mitigate this, architects should provide clear written advice to the client about potential project delays when the BSR involvement is required. In addition, firms should ensure that all employees are aware of the new BSR requirements, and that applications are carefully considered. Applications need to follow the requirements set out by the BSR before submission to avoid the risk of being returned and minimise delays. This has led to the creation of Building Regulations Advisory services provided by firms with building control experience, designed to assist, advise, and guide Project Teams through the Building Regulation Approval process via the Building Safety Regulator.

A prominent area for discussion, with a number of Architects posing queries, is the Principal Designer (PD) role. Under the Building Regulations, the PD is required to ‘plan, manage and monitor the design work during the design phase’ and to ‘co-ordinate matters relating to the design work comprised in the project so that all reasonable steps are taken to ensure that the design is such that if the building work to which the design relates were built in accordance with that design the building work would be in compliance with all relevant requirements’[1].  Although individual designers remain responsible for the compliance of their own design work, the new PD has overall responsibility for co-ordinating the design.  There are also additional requirements, including the need for a competence declaration and a compliance statement. 

As demonstrated above, the duties of the PD are extensive. One challenge is managing a project which requires design expertise from multiple professionals, some of which may be outside of an architect’s area of expertise, yet a compliance statement will need to be signed by the PD on behalf of the full design team.

Our view is that taking all reasonable steps is akin to the standard of reasonable skill and care. As long as the PD can demonstrate the steps taken to obtain written confirmation from all professionals in the design team that their design element of the project complies with building regulations, this should suffice. However, this has yet to be tested by the courts.  In addition, although this may sound easy in theory, the PD may be met by reluctance by professionals to provide the required level of confirmation on compliance, as well as being a time-consuming exercise.  Therefore, it could lead to disputes between the design team and delays in the project.  All these points need to be taken into consideration when accepting a PD’s role, as it is a far more extensive role than what the lead designer role was previously. Firms need to make sure they have the scope of expertise and resources to comply with the requirements of the PD role.

[1] Navigating the Building Safety Act's position of Principal Designer

Remedial Acceleration Plan (RAP)

In December 2024, the government announced the Remedial Acceleration Plan (RAP), with the aim of increasing the rate of diagnosis and remediation of high-risk residential buildings with unsafe cladding. It is the government’s intention that by the end of 2029, all 18m+ buildings with unsafe cladding in a government funded scheme will be remediated, as well as every 11m+ building having a date for completion. In absence of this, landlords will be liable for severe penalties.

The RAP is likely to put even more pressure on an already stretched BSR and is therefore, another factor that is likely to contribute to significant delays which we have highlighted above. 

Furthermore, it is inevitable that when landlords are issued with the aforementioned “severe penalties” they will likely look to recover the significant costs that are involved in remediating these buildings from those who took part in the project. As it is a regulatory requirement for architects to hold PI Insurance, architects are often the last insured party standing and therefore, an attractive target for these types of recovery claims.     

From a risk management perspective, we recommend reviewing both completed projects and those still in the progress which will be under the scrutiny of the RAP. Ensure that all documents in relation to historic projects are retained, and that all advice provided on current projects is in writing and retained. This will aid any defence in the event of a claim.

Skilled Labour

Based on our discussions with architect firms, the lack of architect professionals within the industry continues to be a cause for concern, with issues being reported in relation to both retention and attracting new skilled professionals.

It appears that one reason for this may be a result of salaries stagnating, with the average salary of an architect having dropped considerably compared to figures from 25 years ago. Lower wages coupled with the lengthy time investment to become a qualified architect may be what is putting the younger generation off the profession[2]. This is then compounded by the continual increase in cost of living which makes it harder for firms to recruit.  

Firms need to be proactive about recruitment strategy in such a hard market and an emphasis could be placed on alternative pathways into the profession. For example, apprenticeships and graduate schemes could encourage the next generation of workforce and sustain the industry for it to grow and develop further in the future.

The risk to firms is that if they’re unable to attract skilled professionals and continue to face poor rates of retention, there is a heightened risk that errors and issues may be missed due to a lack of consistency.  Putting some of the suggested strategies in place may mitigate against these risks. 

Economic Instability and Insolvencies

The trend for construction professionals when considering insolvencies is one that stirs concern. The figures from 2024 show the construction industry to be the most susceptible to firms entering administration of all industries on record[3].

With National Insurance Contributions (NICs) and minimum wage increases, as well as interest rates still looking to affect costs in 2025, we anticipate that this will continue to cause disruption in supply chains, increase material prices and energy markets, which could lead to inflationary pressure adding to the cost of living. This increase in costs is usually felt throughout the whole project chain. As employers crack down on costs, pressure is put on the contractor, which is then passed down to the design team, including architects. 

The risk here is that when there is cost pressure, we usually see an increase in claims. Parties may attempt to avoid paying fees in full by raising allegations of negligence, regardless of whether there is any merit in those arguments.  In addition, where contractors go insolvent, architects are often left ‘holding the baby’ as they are the only party left with insurance. 

From a risk management perspective, it is important that architects carry out thorough due diligence on the financial standing of all potential clients before agreeing to the appointment. It is also essential to ensure that your contract effectively protects your position to recover unpaid costs. In addition, make sure all payment mechanisms in the contract are followed accurately to put the firm in the strongest position to recover unpaid fees.  Furthermore, to aid any defence, make sure all documents are retained and all advice is given in writing. 

Cyber and AI

The risk of issues arising from Cyber, and consequently AI, continues to grow ever prominent as technological advancements continue to come thick and fast. It is close to impossible to anticipate where or how the next cyber risk may appear and issues stemming from cyber failures can paralyse and cripple a firm’s ability to work and operate in a productive and profitable manner.

This became painfully apparent in the Crowdstrike incident in July 2024, in which millions were affected by the widespread outage to Windows devices. Additionally, it is important to stay aware of the risks posed by cyber criminals and scams.

To sufficiently prepare for such issues, it is important that firms adopt internal cyber protocols centred around training staff and creating internal policies, such as multi-factor authentication and regular password changes, to best mitigate such risks from external factors.

AI is becoming increasingly popular in every industry and with this, it is important to take advantage of AI in the correct ways to keep up with trends. While AI has already proved useful in helping with admin tasks, including the day-to-day management of projects and streamlining communication, there are more positive effects to be gained.

RIBA has suggested rethinking the traditional way in which you look at the design process by using AI powered building information modelling (BIM). This could stand to completely shift how architects approach the design process. However, it has been stressed that while AI provides an ability to streamline processes in unprecedented manner, the input of human expertise is still vital in its safe and correct use. To be best placed to respond to any such risk that is posed from the perspective of PII, it is important to consider where AI falls in relation to terms and conditions of your policy. While the industry continues to adapt to increasing incorporation of AI, there is naturally going to be a potential risk. Overreliance and insufficient checking could lead to mistakes being made, which could lead to increases in claims. 

Archie Barwick headshot

Archie Barwick

Claims and Technical Executive,
Financial Lines Group