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PI premiums are forcing up costs, says ACE

CONSTRUCTION CLIENTS are paying over the odds because of the excessive professional indemnity insurance demands being placed on consultants, the Association for Consultancy and Engineering (ACE) has warned.

In a survey of 92 firms carried out in May 2005, the ACE found that nearly half have turned down work due to the level of PI cover demanded by clients.

The survey also revealed that two thirds of firms have been forced to increase their fees as a result of increases in PI premiums and excesses.

Consultants rated the level of PI premiums above concerns over profit and recruitment as the biggest issue facing the industry.

'Excessive PI demands on projects ultimately lead to higher costs, a disincentive to innovation, a reduction in true partnership and consequently less choice for clients, ' said ACE legal director Nora Fung.

The survey, State of Business Summer 2005, also revealed a buoyant market with 58% of firms expecting workload to grow in 2006 and 61% predicting growth from 2006 to 2007.

One in four firms increased fees by more than 5% in the fi st quarter of 2005 compared to the same quarter a year earlier.

INFOPLUS Access the 'State of Business' survey at www.nceplus. co. uk.

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