Supplied by MBA North
The Master Builders Association (MBA) North has partnered with Master Builders Insurance, part of the Risk Benefit Solution Group (RBS) to offer specialist engineering and construction insurance for Association members.
The partnership will offer specialised cover and advice to MBA North members, to help them insure against the unique risks facing construction companies.
“Master Builders Insurance are the agents of the contractor, aiming to be seen as part of their risk management team,” says Andrew Friedmann of RBS. “Insurance is a part of life, but poor service and unpaid claims shouldn’t have to be. We work to deliver specialist advice, service excellence and claims support.”
Growing risks in a changing environment
Davis at RBS Insurance says: “The construction industry went through an incredible boom ahead of the World Cup, but most companies were affected by an economic downturn in subsequent years. With less building taking place, their insurance requirement reduced. However, we have seen sparks of revival within the private industry where residential building is picking up. We are hopeful that future infrastructure projects will revive the industry.”
Boitumelo Thipe at MBA North says: “Unfortunately we have also seen an incredible amount of non-payments from municipalities, agents and even some contactors that need to be addressed. Contractors can protect themselves by ensuring that their contracts are drafted, taking into account all the risks and not leave themselves vulnerable to penalties and non-payments- and by working with experienced brokers in the construction industry.”
Friedmann adds: “At the same time, there’s a massive amount of theft, crime and syndicates raiding construction sites, with up to 30% of the industry being affected. The situation is so worrying that the Presidency has appointed a special task force to deal with this issue. This is why insurance has never been more important. As an insurer we are spending a lot of time with our clients, advising them of the risks and ensuring they have the right cover in place.”
“People forget how specialised this field is. You’re starting to see more insurers focus on this space. But we are a very client-focused organisation, with a presence in MBA’s offices in Cape Town and soon in Johannesburg. We will come to the site, look at the risk challenges and discuss meaningful solutions there and then. These are critical resources.”
Overlooked risks
Davis says: “There are a number of commonly overlooked areas in construction insurance. These include product liability: too often, contractors are looking at the specific products they need to insure in terms of their contractual arrangements. But we go further and look at balance sheet protection, when things go wrong on or off contract sites, and beyond the scope of the contractual agreement. For instance, in a housing development, the moment the developer sells it to a third party the indemnity the contractor enjoyed with the developer no longer exists, and therefore it opens a can of worms for long term liabilities.”
“With regards to works cover, too often contractors think that tools and equipment including scaffolding form part of the contractor’s all risks or works cover. They don’t. Contractors need to arrange insurance separately for that,” he says.
Cover across construction risks
Offering tailor-made insurance for housing, infrastructure, commercial and industrial projects, the RBS engineering and construction division helps clients cover the risks associated with construction projects, including machinery breakdown and resulting business interruption and loss of revenue, and design and construct indemnity, providing further protection for losses arising from issues such as design failure, incorrect advice, errors or inadequate project management.
This division is staffed by construction specialists experienced in assessing construction risk and assisting construction clients on cover required from design to start-up, critical path, and the practical completion, including owners’ and directors’ liability cover, and cyber risk.
RBS also has agreements in place to combine the strengths of smaller and emerging contractors to ensure they also benefit from adequate cover.
In general insurance, there needs to be a company or individual with insurable interest in order to be indemnified. Davis says: “In construction, there are multiple parties with insurable interest. So the insurance arranged by the employer or contractor must cover all the parties downstream within the contractual agreement. Our policies adequately cover all parties engaged in the process, making sure that our client is properly covered.”
