How Industry Challenges Impact Engineers Insurance

Imagine waking up to news of a high-rise apartment block evacuated due to cracking walls, or worse, a fire spreading rapidly up the side of a building because of the materials used. 

These events have shaken Australia's construction sector in recent years. These incidents rippled through the industry, hitting professionals like you with rising costs and tighter coverage options. 

In this blog, we’ll talk about the cladding crisis, major building defects, and their knock-on effects on Engineers Insurance.

The Cladding Crisis

Australia's combustible cladding issue exploded into the spotlight after the 2017 Grenfell Tower fire in London, but it hit home hard with local incidents. 

Flammable aluminium composite panels, often used for their sleek look and cost savings, turned out to be a fire hazard, leading to widespread remediation work across cities.

Beyond fixing buildings, this triggered a wave of claims under Professional Indemnity Insurance policies. 

Engineers, particularly those involved in fire safety design and certification, have found themselves in the crosshairs.

Professional Indemnity insurers collected significant premiums from a specific industry in a single year, yet one major insurer faced claims exceeding the total premiums collected. This imbalance creates challenges for insurers in maintaining stable rates.

Now, in 2025, the market shows signs of softening after years of hardening, with premium rates easing for some low-risk clients. However challenges persist: many insurers now include exclusions for defective cladding materials, leaving gaps in coverage for engineers who certify or design around them. 

Ultimately, the cladding crisis resulted in higher remediation costs as more buildings nationwide need urgent fixes, increase in claims for cladding defects, and premium hikes.

Pro Tip: As an engineer, it’s best to review your policies for cladding-specific endorsements. It may be a simple step but it can prevent big surprises down the line.

High-Profile Defects

Beyond cladding, structural defects in major projects have amplified the pressure on Engineers Insurance. 

Take the Opal Tower in Sydney's Olympic Park, completed in 2018. Just months after residents moved in, loud cracking sounds echoed through the 38-storey building, forcing hundreds to evacuate amid fears of collapse. Investigations pinned the issue on concrete cancer and design flaws in the floor slabs.

This case isn’t isolated. Insurance claims against Australian engineers can continue to climb, driven by complex projects and regulatory scrutiny. 

In New South Wales, mandatory Professional Indemnity Insurance for registered building practitioners will kick off fully in July 2026, aiming to protect consumers but adding compliance burdens for engineers.

Why This Matters to You

These crises didn't emerge in a vacuum. They arise from multiple challenges and changing regulations that increase engineers' responsibility to predict risks.

The result? A Professional Indemnity Insurance landscape where premiums have stabilised but exclusions linger and claims investigations drag on. For fire safety engineers and certifiers, it's especially acute, with some facing coverage denials tied to cladding or defect histories.

Here at Tank Insurance, we can help connect you with the right insurers and tailor solutions to fit your risks. 

If recent headlines have you rethinking your Engineers Insurance, don’t hesitate to get in touch with us. A quick chat could clarify how these industry shifts affect you personally. 

What's one question on your mind about Professional Indemnity Coverage? Drop us a line at team@tankinsurance.com.au or call us at 02 9000 1155. We're here to help unpack it.