Industry Specialist Training: Construction

Industry Specialist Training: ConstructionTopic 1 – Market segmentation and key issues

Prepared and delivered by Diane Jenkins and Nick Thomas & Associatesin partnership with AXA Commercial

Industry Specialist Training: Construction – Topic 1: Market segmentation and key issues 2

Introduction

¡ Nick Thomas & Associates in partnership with AXA Commercial ¡ Delivering practical technical training support to AXA Broker partners ¡ Today is the first topic of five in our focus on the construction sector

» Topic 1 – Market segmentation and key issues

» Topic 2 – Liability issues in the construction sector part 1 – EL and PL

» Topic 3 – Liability issues in the construction sector part 2 – non–negligence cover, financial loss and PI

» Topic 4 – Contractors All Risks, Erection All Risks and BI issues

» Topic 5 – Other cover options for the construction sector

¡ After each topic you can test your knowledge with a short quiz


Topic 1 – Market segmentation and key issues

¡ Who is involved in the construction industry? ¡ What types of policies are needed by the construction industry? ¡ How turnover and contract size drive segmentation in the insurance market ¡ What is difference between Construction All Risks (CAR) and Erection All Risks (EAR)? ¡ Broking information required

Agenda – Construction

4Industry Specialist Training: Construction – Topic 1: Market segmentation and key issues

Parties in a construction project

Purchaser

Building contractor

Tenant Funder

Professional consultants Sub–contractor

Employer


Parties in a construction project – contracts

BUILDING CONTRACTLEASE SALE AGREEMENT

APPOINTMENTS

BUILDING CONTRACT

SUB–CONTRACTS

FunderTenant Purchaser

Professional consultants Sub–contractor

Employer Building contractor


¡ Extensions on property policies ¡ Existing structure ¡ Construction All Risks (CAR),

Erection All Risks (EAR) ¡ Employer controlled project policy ¡ Delay in start–up (DSU) ¡ Bonds ¡ Latent defects ¡ Legal indemnities

¡ Cyber ¡ Environmental impairment liability ¡ General business policies

» Employers’ Liability (EL), Public Liability (PL), Property, Business Interruption (BI), Motor, etc.

Insurance needs of employer


Insurance needs of professional consultants

¡ Professional Indemnity (PI) ¡ Cyber ¡ Office/business package

» EL, PL, Property, BI, motor, etc.


¡ Contractor’s packages » EL, PL, CAR, EAR, tools, goods in transit, office contents, BI

¡ Motor/plant and equipment ¡ Project specific policies ¡ Design and build PI ¡ Financial loss ¡ Bonds ¡ Cyber ¡ Environmental impairment liability

Insurance needs of building contractor


¡ Tradesman packages » PL, EL, tools, contract works, financial loss, personal accident, office

contents, BI

¡ Motor/plant and equipment ¡ PI (depending on type of work undertaken) ¡ Bonds ¡ Environmental impairment liability ¡ Cyber

Insurance needs of sub–contractors


¡ Turnover (minimum or maximum) ¡ Wages and/or number of employees ¡ Maximum contract size ¡ Usual number of contracts (one–off project) ¡ Position in contract chain

Segmentation of construction insurance market


Construction all risks

¡ Either employer or main building contractor takes out policy – depending on contract

¡ Covers damage to works, plant, machinery, employees’ effects

¡ Annual basis or single contact

Erection all risks

¡ Either employer or main building contractor takes out policy – depending on contract

¡ Covers machinery undergoing assembly, installation, testing and commissioning on contract sites

¡ Annual basis or single contact

What is difference between CAR and EAR?


¡ How long firm has been in business? ¡ Names and experience of directors ¡ Details of previous contracts ¡ Maximum contract size ¡ Detailed description of type of work undertaken

» position in contract chain (main contractor or sub–contractor)

¡ 5 years’ claims experience » details on claims

» what has been done to prevent reoccurrence?

Broking information required


¡ Usual contract conditions used ¡ Full wages

» split between employees involved in clerical, manual away, manual premises, drivers, yardmen, site supervisors and fixed woodworking machinery

» labour only sub–contractors

¡ Payments to Bona Fide Sub–Contractors (BFSC) » split between types of BFSC



¡ Turnover – last 5 years’ turnover, split between: » types of business activities (if more than one type

involved)

» types of locations worked at (eg., residential, commercial, industrial, leisure, offices, schools)

» any work involving use of materials containing asbestos

» work above 10M from ground level

» work below 1M (and if applicable 3M, 5M)

¡ Use of heat details split by own work force and BFSC

¡ If contractor – what percentage of turnover is derived from contracts where the Employer is responsible for insuring the contract works?

¡ Split between work in/on new build and existing buildings




¡ What percentage of work involves the use of timber frames?

¡ Details of employee and site risk management » does Insured act as site controller?

» Covid safety

» site security

¡ Estimated maximum exposure any one site

¡ Inventory of plant detailing » individual makes, models and value

» any security devices that are installed

¡ Estimated maximum exposure for own/hired in plant on site/own premises » annual hiring charges



¡ Hard market » especially PI for architects, surveyors, health and safety consultants,

engineers

¡ Difficult to place: » roofers, scaffolders, demolition, steel erection or fabrication, asbestos

removal, forestry contractors, steeplejacks, piling, work on railways, involving tunnelling, or bridges and viaducts

¡ Need time and good information


Summary and what next?

¡ Sum up ¡ This module also includes a short quiz so you can test your knowledge on

construction market segmentation and key issues ¡ Next in our focus on construction sector:

‘Topic 2 – Liability issues in the construction sector part 1 – EL and PL’

Industry Specialist Training: Construction Topic 1 – Market segmentation and key issues

Thank you

Documents

Industry Specialist Training: Construction