Insurers begin pricing AI risk into construction professional indemnity cover

London‑market professional indemnity underwriters are shifting from curiosity to scrutiny over construction firms’ use of generative AI, routinely probing governance, model validation and human oversight as they begin to price and underwrite related risks.

Professional indemnity insurers are increasingly pressing construction firms on how they govern the use of artificial intelligence, reflecting a shift from curiosity to scrutiny across the London market. According to a mid‑year review by broker Miller Insurance, questions about AI are now appearing routinely on PI proposal forms as underwriters try to understand how firms control and oversee new tools. The development marks a notable moment: insurers are not simply watching adoption, they are beginning to price and underwrite around it.

Insurers’ concerns span intellectual property, potential design errors and the risk of negligence if AI systems are inadequately overseen. “Proposals now often include questions about AI, reflecting concerns over intellectual property issues, design errors and potential negligence from inadequate oversight,” Miller said in its bulletin. Regulators share parts of that caution: the Information Commissioner’s Office has warned that AI can exacerbate known data‑security risks and complicate lawful processing, while government guidance urges protections against cybersecurity threats to AI systems.

Underwriters have a particular interest in generative AI deployed in design, planning and risk forecasting, the broker report adds, because those applications can directly influence project outcomes and contractual obligations. That focus helps explain why insurers are asking for evidence of governance, human oversight and model validation rather than relying on surface‑level assurances. The practical upshot is that firms using generative models for schematic designs, automated calculations or probabilistic risk models may face closer scrutiny at renewal or when tendering for work.

Industry bodies and large contractors are already framing how firms should adopt AI responsibly. The Chartered Institute of Building’s AI Playbook encourages practitioners to “treat AI as your new colleague”, using it to supplement human judgement while retaining robust oversight, ethics checks and data‑management practices. At the same time the ICO publishes toolkits and recommends Data Protection Impact Assessments and transparency measures where AI systems touch personal data, reinforcing that compliance is as much about process as technology.

At the same time, the sector is seeing substantive investment in AI from major contractors. Balfour Beatty said in a company statement that it has committed £7.2m to embed Microsoft 365 Copilot across its Microsoft estate as part of a digital transformation intended to automate repetitive tasks and improve site safety and decision‑making. The contractor framed the spend as one of the UK construction industry’s largest AI deployments, while Miller’s report and other market updates note that adoption at scale is now a live commercial trend insurers must reckon with.

Market conditions for professional indemnity cover are meanwhile softening in ways that complicate the picture for firms. Miller’s review and a half‑year update from broker Gallagher both note improving capacity and stronger insurer appetite that have driven competitive pricing and rate reductions for well‑managed risks. Yet that relief is uneven: rising contractual PI limits demanded by public sector clients and tier‑one contractors are squeezing smaller consultancies and specialist subcontractors, who may struggle to increase cover and remain eligible to tender.

Regulatory change remains a powerful background factor. The Building Safety Act 2022 continues to influence insurer attitudes towards long‑tail liabilities, and early disputes suggest that safety‑compliance failures could be treated as breaches of professional duty, potentially triggering PI claims. “Early disputes suggest that safety‑compliance failures may constitute breaches of professional duty, possibly triggering PI claims,” Miller warned. Gallagher’s market update also highlights persistent caution around cladding and fire‑safety exposures and broader underwriting scrutiny tied to regulatory shifts.

For firms seeking the best terms, brokers and industry guidance point to practical steps: document governance and model‑validation processes, perform DPIAs where systems process personal data, apply cyber controls aligned to the government’s AI Cyber Security Code of Practice and make use of the ICO’s AI and data‑protection resources. Miller’s analysis is clear that businesses demonstrating strong internal governance, quality‑control and supply‑chain diligence are more likely to secure favourable cover. The message for the sector is straightforward — innovation will continue, but insurers are signalling that robust oversight, data protection and demonstrable risk management are now prerequisites for both adoption and insurance support.

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Source: Noah Wire Services

Noah Fact Check Pro

The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.

Freshness check

Score:
8

Notes:
The narrative presents recent developments in the construction sector’s adoption of AI and insurers’ responses. While similar themes have been discussed in industry reports from May 2025, such as WTW’s analysis on AI’s impact on professional indemnity insurance ([wtwco.com](https://www.wtwco.com/en-gb/insights/2025/05/artificial-intelligence-and-the-impacts-on-professional-indemnity-insurance?utm_source=openai)), the specific focus on insurers’ scrutiny of AI in construction firms’ operations appears to be a novel angle. The earliest known publication date of substantially similar content is May 2025. The report is based on a press release from Miller Insurance, which typically warrants a high freshness score. No discrepancies in figures, dates, or quotes were identified.

Quotes check

Score:
9

Notes:
The direct quotes from Miller Insurance and the Information Commissioner’s Office (ICO) are unique to this report. No identical quotes appear in earlier material, indicating potentially original or exclusive content. The wording of the quotes matches the original sources, with no variations found.

Source reliability

Score:
9

Notes:
The narrative originates from Construction News, a reputable UK-based publication. The primary source, Miller Insurance, is a well-established broker with a public presence. The Information Commissioner’s Office (ICO) is a legitimate UK government department. No unverifiable entities are mentioned.

Plausability check

Score:
8

Notes:
The claims regarding insurers’ increased scrutiny of AI in construction firms are plausible and align with industry trends. The report cites Miller Insurance’s mid-year review, which is a credible source. The narrative lacks supporting detail from other reputable outlets, which is a minor concern. The language and tone are consistent with UK English and the construction industry context. No excessive or off-topic details are present.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary:
The narrative presents original and timely information on insurers’ scrutiny of AI in the construction sector. The quotes are unique, and the sources are reliable. While the lack of supporting detail from other reputable outlets is a minor concern, the overall assessment is positive.