The Federation of Master Builders looks after the insurance interests of its members through a specialist division that works in partnership with a major broker

Company Name: Federation of Master Builders (FMB)

Address: Gordon Fisher House, 14/15 Great James Street, London WC1N 3DP

Phone Number: 020 7242 7583



What does the FMB do?
The FMB is the construction industry's largest trade association and represents 13,000 firms. Its role is to provide an industry focus for small and medium sized firms, to promote excellent standards in craftsmanship and assist builders to continually improve performance and service levels.

Turnover in last financial year: The estimated turnover of FMB members in 2002 was £3.5bn

Number of staff: The estimated number of staff employed by FMB members is around 150,000. Around half of FMB members employ fewer than five people.

Who makes the insurance decisions? Each FMB member makes its own decisions. As the majority of FMB members are partnerships or limited companies, the person who would usually make such a decision would be a company director.

Broker: The FMB offers its own insurance service to members through FMB Insurance Services, provided by Aon. This service aims to keep FMB members' premiums as competitive as possible.

How was the partner chosen? The partnership with Aon has existed for more than 40 years. Aon understand the needs of FMB members really well, says trhe FMB. There is a mutual trust between Aon and the FMB that has been built up over many years, it adds.

Types of Insurance purchased: Employers' liability, public liability, vehicle, plant and equipment and property Insurance.

What have your experiences been of insurance over the past year? Outside FMB Insurance Services, there is the wider, well-documented issue within the construction industry of premiums spiralling out of control. In FMB Insurance Services' market briefing, which came out in September 2002, it was noted that builders' premiums had seen increases ranging from 30% to more than 500%, especially for businesses involved in roofing, scaffolding, ground working and damp-proofing.

Such increases can make finances tight for building firms and often there is little option but to pass on the increased costs to the consumer. This in turn can make a builder less competitive than a rogue or 'cowboy' trader who may not even have insurance.

This plays into the hands of cowboy builders so there is a real need within the construction industry to work with insurers to keep premiums at a manageable level. There have even been cases of insurers refusing to offer cover to firms operating in some sub-sectors.

The main reasons that our report found for the disproportionate increase in insurance premiums in the construction industry included:

  • The collapse of Independent Insurance in June 2001 - a major player in construction risks.
  • The 11 September terrorist attacks - Lloyd's estimated its losses from the World Trade Centre to be £1.98bn. Japanese insurer losses were estimated at $840m (£537m). US insurers faced losses of around $25bn (£16bn). Although the global insurance market initially absorbed these losses, the impact on pricing and the perception of risk can now be seen in the UK.
  • Fewer insurers to choose from - A number of high profile mergers have taken place in the industry in the last few years, reducing the number of insurers available to underwrite risks.
  • An increasingly litigious society. The blame culture seen in the US appears to have taken root in the UK and the number of claims being made has increased significantly. Among the genuine claims there are those that must be regarded as 'speculative' but even these have to be defended and this adds to insurers costs.
  • Increased awards made by the courts for damages.
  • The continued rise in the number of 'diseased' claims.
  • The rise of no-win, no-fee accident management companies - The litigious society has been fuelled by the creation of a number of high-profile claims management companies who engage in extensive advertising. While they are providing benefit to many in a position of suffering injury or damage their involvement does encourage more people to claim for slips, trips and falls.
  • Inadequate health and safety management systems.
  • The report concludes that, from the point of view of FMB members, it is vital that the construction industry continues to talk regularly with the ABI.