What is the role of the broker in the construction sector?

Martin Hiller

Chairman of UK construction, Gallagher

“As a general rule, small contractors with a turnover above £5m need professional advice, although the extent will depend on the capability within the firm, as well as their activities. 

“This kind of advice is normally provided by generalists reflecting the ‘low risk’ exposures and the more commoditised solutions.   

“An important part of the broker’s role is to manage client expectations”

Ian Curtin, Miller Insurance Services

“Medium-sized contractors may not be aware of the specialist advice they should be getting in terms of the appropriate insurance coverage, contractual expertise and risk management. 

“Some may have insurance expertise or directors with a good insurance understanding, but those that do not will need to buy it in, just as they do with any other advice, whether it’s legal, contractual or design. 

“As a business grows and gets involved in more complex projects with less standard contractual liabilities and exposures, it will need to partner with a broker that has a thorough understanding of these risks and solutions. 

“Unlike project insurance, annual contractors’ insurance is very relationship driven. Clients like the continuity of that relationship with their broker and insurer because that knowledge and understanding can help ensure a “fit for purpose” service and the best claims outcomes.

“Major contractors are absolutely used to receiving specialist advice from their insurance brokers. They partner with brokers who have a deep and broad experience in the different segments of the industry in which they operate and who can pro-actively respond to their ever-changing needs.”

Ian Curtin

Head of energy construction, Miller Insurance Services

“The market within energy construction is quite stressed at the moment. It remains soft because of the supply and demand equation despite the poor results of the market in the energy class. But we’re servicing clients in the energy sector who have themselves been hurting. What we have to remember is that the insurance market can be very inwards looking and focus on its own problems, whereas as a broker you also have to be sensitive to the needs of the industry you serve.

“An important part of the broker’s role is to manage client expectations relative to the status and capabilities of the insurance market, while continuing to articulate and advocate the position of the client. We need to negotiate the best deals we can for them, given the circumstances we find. And we need to come up with innovative solutions in terms of programme structures.

“While recognising the market is still soft, we need to anticipate change and advise our clients to be prepared for it. The last thing an insurance buyer wants is to have to explain to his or her chief financial officer why there’s been a sudden jump in insurance price, why there is less capacity, why the conditions have become more restrictive or why they’re having to take on a bigger retention. So, we need to manage their expectations over a period of time in anticipation of those changes.

When you have major projects that last five or six years, or longer, you also have to advise the client relative to the security, standing and stability of the carriers that we recommend. That’s an important responsibility, particularly at a time when operating conditions in the construction insurance industry are so difficult.”

Colin Hamling

Former commercial and insurance manager at Crossrail 

“Certainly on Crossrail we had a very good relationship with our brokers in what was then a very difficult construction market, and they did the best they could on cover. 

“The brokers were also invaluable in their technical knowledge. There are a relatively limited number of brokers who have that degree of large project experience and the specific knowledge that you need in terms of policy wording and what the insurers can offer in risk management and claims handling.

“On major construction projects like Crossrail we have very much of a tripartite relationship between broker, insurer and client in terms of cover and ongoing claims and risk management. 

“It is all a three-way relationship, where everyone, including the loss adjusters and claims handlers, has to be experts in tunnelling and other construction techniques.”