NFB warns on switching insurer

The National Federation of Builders (NFB) is urging contractors to think twice before changing their insurance providers this year.
"We are asking our members to think very seriously before chopping and changing their insurance underwriters," said NFB chief executive Barry Stephens. "If they are being provided a good service by a reputable company, my advice is to stick with them before we see harder times in the insurance market.
"Premiums have come down drastically in recent years, but there will inevitably be a return of higher costs for cover."
Stephens' advice comes after industry insiders told CJ that several insurance providers are likely to pull out of construction altogether in the wake of another insurance crisis.
"The NFB's comments are very wise," one industry source said. "As soon as the hard times return, we can see contractors getting stung by insurance companies that won't want to take the hit of covering contractors."
The NFB is now in negotiations with the Association of British Insurers about getting more of its member companies to provide incentives for NFB members who sign up to the organisation's Construction Accredited Performance Standards (CAPS) scheme.
Under the NFB's current arrangement with Zurich Insurance, members are able to get a 20% immediate cash rebate 24 months after they have taken insurance out with the company.
It is hoped that members of the defunct Quality Mark (QM) scheme, which now comes under the new name of Quality Scheme (QS), could also be persuaded to join the NFB's CAPS scheme by offering improved insurance incentives.
The NFB is holding conversion clinics for companies that want to switch from the government's anti-cowboy accreditation scheme to CAPS.
A total of 54 companies originally registered with QM are NFB members, many of whom are now considering whether to go with CAPS or wait for the roll-out of QS later this year.
Insurers will push for a new wet civils code of practice to help curb the difficulties in obtaining insurance cover for these high-risk projects, according to Heath Lambert Group, writes Tim Wood.
The move is one of a number of initiatives highlighted by the independent insurance and reinsurance broker in its annual report, which provides an overview of recent and likely developments in the construction insurance market.
Other issues likely to impact construction this year are:
The tunnelling code of practice is finally starting to have an effect on the market.
Construction all-risk policies involving heavy civils, such as tunnels, roads and bridges and wet civils, such as harbours and dams, will continue to be difficult.
Premiums for delay in start-up cover for all types of projects are on the rise, with increased time deductibles being imposed.
A shift in insurance for PFI projects has seen contractors seeking cover for both construction and operation risks; few insurers are able to provide both effectively.
Political risk underwriters should have an increased appetite for larger and longer-term construction projects and project finance transactions.
Plans to introduce a US-style team of "untouchables" to help stamp out racketeering on construction sites in Northern Ireland have got off the a slow start. It is understood that less than 10 contracts have so far been let under the scheme.
The project was introduced last year by the Northern Ireland Office after consultation with the NI Construction Employers Federation (CJ 9 June 2004). It involves the engagement of independent private sector inspector generals (Ipsigs), who will monitor contracts in order to stop paramilitary groups using the industry as a source of illicit funds. The idea is based on a concept employed in the US to combat organised crime on building sites.
"There are some issues concerning the scheme which may require review," said Tony Doran, chief executive of the Construction Employers Federation.
Original plans were for the Ipsigs to be piloted on five or six public sector contracts worth £1m to £16m. But the initial trial is believed to involve even fewer contracts.