Analysis

Beware BIM's insurance liability risk increase

4 July 2013

When the government announced in May 2011 that BIM would be compulsory on all public sector projects from 2016, it was rapidly elevated from the status of clever software used by some to a development that insurers needed to monitor.

No reported claims are yet to emerge anywhere in the world but insurers are keeping a watchful eye on the ways in which BIM is being implemented.

Many hope that the technological advances of BIM, combined with greater collaboration between parties, will result in a reduction of risks on projects, meaning lower insurance premiums for all. Some even foresee a time when not using BIM on a project is perceived by insurers as the greater risk.

However, more cautious observers have argued that BIM increases risk for the following reasons:

  • BIM has the potential to blur traditional responsibilities, making risk allocation more difficult. With BIM Level 3, a change by one design consultant could automatically be carried through to another consultant’s work due to the intelligent nature of the software.
  • BIM inherently brings IT/cyber risk. The greater the electronic data and the more parties using the model, the greater the risk if the model becomes corrupted.
  • Collaborative working makes it harder to safeguard intellectual property rights over shared data.
  • The more uses the BIM model is put to, the greater the risk. Where the BIM model is used for life cycle purposes, liability could extend long after completion.

In March 2013, the Construction Industry Council (CIC) launched a BIM Protocol with the aim of setting out stakeholders’ rights and liabilities when working on BIM projects and addressing some of these concerns. It also published the Best Practice guide for professional indemnity insurance when using BIM and the outline scope of services for the role of information management. Importantly, it is intended that the Protocol will take precedence over existing documents in respect of any BIM-related issues. 

The Protocol also brings clarity in relation to IP rights and confirms that information loaded into the model remains the property of the party that developed it. It then sets out a comprehensive set of licences and sub-licences to ensure full use of the BIM model by the project team.

However, perhaps the biggest change is the introduction of the role of information manager who is responsible for managing the process of information exchange and policing compliance with the Protocol, the model production and delivery table (MPDT) and information requirements. They are also responsible for security of the BIM model. The information manager is a separate role to that of BIM coordinator, who has design responsibility for clash detection and model coordination (for example) while the information manager has no design-related duties.

Despite this separation of roles and duties, the Protocol guidance envisages that a standalone third party will only be used as information manager in some circumstances, and the role is more likely to be performed by the design lead or the project lead. 

Design consultants may need to adapt their practices to be able to perform this role, and there are risks that any issues with the compatibility or integrity of data fed into the models will increase the risk that the model will not perform as expected. The Best Practice guide suggests that the role of information manager is not expected to cause concerns for PI insurers, provided that the role remains a procedural data-checking role and does not creep into the checking of design clashes and design coordination and therein, perhaps, lies the rub.

Generally, though, BIM Level 2 should not materially alter consultants’ risk profile and therefore premiums. Despite this, the guide sets out some practical guidance for design consultants when taking on BIM projects. Those insured are advised to consult with their brokers and make disclosures if, for example, they are undertaking the role of BIM coordinator or information manager or if they will be hosting a BIM environment.

Insurers on the whole have become comfortable with Level 2 BIM, but as the guide admits, BIM Level 3 (full collaboration on a centrally hosted model) raises “very different liability issues which will need further consideration”.

By Monica Lesny, partner, and Rebecca Reidy, associate, at law firm CMS Cameron McKenna