Insurance costs set to soar for contractors

Grant Prior 2 weeks ago
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Contractors are facing another round of major hikes in insurance premiums as the market continues to tighten for cover.

Experts at broker JLT Group are warning that Professional Indemnity (PI) premiums for design and build contractors could more than double when the latest round of renewals starts.

A number of insurance firms have quit the PI market completely while those left are hiking prices.

The market has been hit by demands from insurance regulators to stem losses and the continuing fall-out from the Grenfell disaster.

Policy excesses are also expected to rise sharply and some cover withdrawn completely in certain sectors of the cladding market.

Tim Smith, CEO of JLT Specialty’s Construction team said: “The market has been hardening in the last ten months but things have really intensified in the last three.”

Smith warned the whole supply chain could be affected alongside building owners.

He said: “It has often been the case that main contractors transfer the risk down the supply chain and expect their subcontractors to have cover.

“That may no longer be possible because smaller firms will find it very difficult to get adequate cover so the Tier Ones can no longer take it for granted that the supply chain is secure in that regard.

“Building owners must also be reasonable when it comes to the level of guarantee they expect from contractors.”

JLT is advising construction companies to start negotiating as early as possible with their insurers and brokers.

Smith said: “Insurers need as much information as possible and want to see that risks are well managed by contractors.

“Start to talk about renewals as early as possible and brokers can certainly help you find cover.”

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