Construction knowledge is a must for all insurers

by Terry Dunning

Ask any construction professional where the world’s most exciting projects are being built, and it would be surprising to hear an answer other than the Middle East.
Descriptions of the projects often include a string of superlatives and involve construction techniques at the forefront of technology.

None of these projects would get off the ground without adequate insurance protection during construction and yet if you were to ask construction professionals what the insurance industry is doing to respond to this boom, the chances are that you may get no more than a shrug of the shoulders.

In RSA’s case, we have invested heavily over the last 18 months in the acquisition of specialist construction and engineering insurance personnel who are now based in the region.

While it could be argued that the driver for this may have been to capitalise on the opportunities this brings for an insurer, the question arises as to whether this investment translates into an improved service for the end user.

When construction claims arise, the insurer should be able to work with the project team to resolve as quickly as possible what may be an emergency decision.

Issues involved may include innovative technical engineering methods and procedures, conditions of contract, project management tools, industry legislation and voluntary or mandatory codes of practice.

The better understanding of these issues the insurer’s claims personnel have, the easier it will be to work with the project team to reach a satisfactory conclusion.

This is best achieved by individuals with construction industry experience together with in-depth knowledge of the theory and practice of insurance and construction insurance in particular.

An onsite construction claims handling ability will further enhance the effectiveness of the insurer in being able to bring their expertise to the table where the decisions need to be made.

Most global contractors and construction professionals will readily offer their ability to service projects in the Middle East. However, the most successful are those who have shown the commitment to establish a local presence and effective infrastructure.

Gone are the days when a visiting project team, no matter how skilled, can take their queries back to Europe or the US before being able to commit to decisions.

Similarly, most global insurers will offer cover for projects anywhere in the world. But without the ability to provide a local, high-level claims service, they will remain at the same disadvantage when it comes to providing on-the-spot solutions.

The industry now requires the members of its supply chain to become partners rather than merely service providers or sub-contractors. Long-term relationships are forged which bridge the life-span of individual projects.

The effective construction insurer will embrace this concept by offering other services such as workshops and training in the understanding of the insurance policy and its application in the event of claims, thereby establishing and maintaining those all- important working relationships.

While insurance claims may not be as certain as death and taxes, it is a fact that no matter how effective risk management becomes, claims will still occur. The construction industry by its very nature is one where risk can never be completely eliminated.

Insurance is all about the business of risk and this includes learning from risks that have gone wrong, in other words, from claims.

An effective construction insurance proposition will also include specialist risk surveyors who are able to provide an additional pair of eyes as the construction of a project proceeds.

This is not to second guess the project team but to use their knowledge of previous claims to provide a different viewpoint.

Again, by utilising locally based specialist resources the insurer is able to provide an added value service through which effective working relationships can be established and developed over the life of the project.

No two construction insurance claims are the same. An effective construction insurance proposition for any project should include added value to its clients gained from experience across the industry.

Construction Week

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