Construction firms ‘gambling without insurance’
Insurance costs in the building and construction sector have more than doubled, and more and more companies are finding it increasingly difficult to afford cover, according to the Construction Industry Federation (CIF).
In an example cited by the CIF, one of its members was quoted:
€6,600 in 2000
€8,900 in 2001
€13,000 in 2002
€27,000 in 2003.
"Naturally enough, we could not afford this and thus at the moment have no cover, which means letting two of our four people go and only quoting for small jobs," the member said.
The CIF, which represents the bulk of the country's construction companies, wants reform so that the 190,000 jobs in the sector can be safeguarded.
It is calling for legislation which would allow all commercial policyholders to receive full details of all the claims made under their policy during the preceding five years, as well as the amount of any reserves being held.
This information should be supplied by the insurer to the client, and it should not be sufficient to only make it available to the existing broker, thus increasing transparency, openness and accountability, the CIF said.
Just three firms currently quote for construction business and one insurance firm controls more than 50% of the construction insurance market.
Co-ordinated action by Government, insurers and employers is now critical if the construction industry is to get a handle on spiralling insurance costs, the CIF said in a presentation to the all-party Joint Committee on Enterprise and Small Business.
Much public debate has focused on motor insurance, but everyone is affected by the impact of increasing insurance whether it be motor, household, public and employers' liability, or other forms, the CIF said.
"From the construction business perspective, our major concern is public and employers' liability insurance, the cost of which has more than doubled for many companies in the last two years, and when taken against more difficult trading conditions and other cost increases, are having a major effect on the competitiveness of many companies.
"Insurance costs are now the second largest cost of running a construction business, after labour costs. The number of insurers active in the Irish market has fallen dramatically.
This has resulted in a major reduction in competition among insurers quoting for construction business.
"Many firms have great difficulty getting a quotation from more than one insurer and some are lucky to get a quote at all.
In addition, many of the policies now offered include limitations and restrictions which increase the potential exposure and cost to firms in the event of a claim," the CIF says in its submission.
