Insurers facing up to contractor shortage

There are rising concerns over the supply of contractors available to carry out works for insurers due to issues over payment and the availability of work.

The problem is expected to be further exacerbated with an ‘event year’ – a dramatic rise in insurance claims – predicted to bite at the time of the 2012 Olympic Games.

These are some of the concerns raised by the Subsidence Forum which has been set up to look at the insurance market and the issues facing contractors when handling insurance work such as underpinning to tackle subsidence.

It is estimated that there are less than 20 underpinning contractors currently on the panels for insurance firms. Twenty five years ago the number was 50.

Workloads are also dwindling with less than 3% of a contractors’ workload coming from the insurance sector. Five to 10 years ago the figure was nearer 50%.

One of the reasons behind the reduction in interest is payment problem for contractors as insurers often use third parties to assess claims which often draws out the payment process.

The Association of Specialist Underpinning Contractors recently reported that over 50% of its members’ invoices are sitting with the insurance industry for more than 60 to 90 days plus, despite being presented with a 30-day term.

Contractors are also finding that insurance companies are looking for firms with a national capacity rather than using a local skills case. This has resulted in contractors to look at other sectors where they can use their expertise on foundation work.

One contractor, the Withers Group, said it was spending more time undertaking super-structure repairs and has moved into other areas such as new build foundation work and retro-fit basements.

“We’ve all had to change our approach and look for differing solutions and innovative techniques,” said Withers’ managing director of subsidence repair specialists Rob Withers.

He also echoed the concerns over resources if an event year occurs. “If there were around 40,000 to 50,000 claims the industry would react as before and cope. But there’s one big difference - the 5% of claims that result in underpinning would hit contractors in the 2007/09 period, right in the middle of the Olympic Village construction.

“It will be a dilemma," he said. "Contractors who have a strong relationship with their insurers will stay loyal, but there’s no doubt skilled operative will be in demand. They will be sourced from the Midlands downwards, which could leave insurers without cover.”

John Parvin, chairman of the forum, said: “We hope contractors stay loyal... while we would like to maintain a steady workflow, the very nature of claims means they do ‘peak and trough’.”