Tunnelling out of insurance crisis

A code of practice (CoP) for the procurement, design and construction of tunnels and underground structures in the UK looks set to save the tunnelling sector from the insurance crisis.

Drawn up by a working party comprising the British Tunnelling Society (BTS) and the Association of British Insurers (ABI), the CoP aims to promote and secure best practice for the minimisation and management of risks associated with the design and construction of tunnel works.

Duncan Southcott, engineering manager at Allianz Global Risks and chairman of the ABI's construction and engineering panel, told CJ: "The insurance industry would not have been able to continue to support tunnelling projects if the recent bad loss experiences continued.

"The insurance industry was in a similar position in early 1992 when it worked with the construction industry to create the joint code of practice for the prevention of fire on building sites, which has been a resounding success."

The CoP states that insurers will require compliance on all projects where the value of the tunnel works is £1m or more. Non-compliance with the CoP (including on the part of those procuring the works) could result in a possible breach of contract.

The document is highly prescriptive and states that risks will be identified and their ownership clarified through the use of risk assessment and risk registers, which will be live documents reviewed and revised at least monthly.

Eddie Woods, associate at Arup and part of the working party, said there is no significant cost impact. "The objective is to reduce risk by having knowledge before tender of the risks. This could increase tender costs, but should reduce outturn costs and programme risks as it is better to plan and mitigate against a known risk than come across the unexpected."

The CoP places a lot of emphasis on clients, stating that they will have demonstrable technical and contract management experience appropriate to the type, scope and extent of the project. If the client does not have appropriate experience, it will have to appoint a representative with the appropriate skills.

Other construction sectors afflicted with insurance problems could take a lead from tunnelling. Southcott said: "The construction insurance sector needs to have greater confidence that claims experience will improve - CoPs can only increase that confidence."