Inside the quirky world of structural defects insurance with CRL’s Steve Mansour

Structural defects insurance, which provides cover for deficiencies in building work for new buildings and other major projects, is a little bit different to most other lines of insurance.

Firstly, cover lasts for 10 years, but it doesn’t start when the customer hands over the premium. Instead, cover starts once the building work has been completed, meaning that policyholders often hand over money months or even years before the cover starts.

In the meantime, specialist surveyors regularly inspect the work to ensure it is being carried out to a high enough standard, and cover finally starts once the work is completed and signed off. It is a particularly common product for new housing developments.

CRL is a specialist provider of these products, and chief executive Steve Mansour says it was an interesting one to break into.

“We came into the latent defects insurance market eight years ago, and it is quite an unusual market,” he says. “When we entered the market it was dominated by NHBC, and they still dominate today, but back then they were almost exclusively dominating the market.

“NHBC’s prevalence in the market back then meant that most consumers assumed that NHBC was a government body or some sort of regulatory body, because there was no competition and as a result of that there was no real education in the market.”

“We shook that up quite quickly and became the third largest provider of latent defects insurance very quickly and have maintained that over the last eight years,” he adds.

Mansour says that CRL’s task was made easier by the complacency that had crept into NHBC’s service levels.

“It wasn’t that difficult for CRL to break into the market,” he says. “NHBC does a lot of great things in the housing market, but inevitably when you have someone so dominant in the market, you do get some complacency in terms of customer service.

“When we popped out as one of the only alternatives to the NHBC, they embraced us, because they wanted to see what it was like to work with somebody other than NHBC.”

Mansour says that CRL’s breakthrough led to others trying to replicate their success, and that now the market is seeing even more players offering structural defects insurance.

“We had the situation where the market used to be dominated by one large player, NHBC, and then after we entered we saw a lot of new entrants who thought they could easily gain market share,” he says. “But they ultimately realised it is not that simple, and a fair few of them pulled out of the market.

“Now we are seeing a lot of small players entering the market who have contacts in the property developer market and think they can arrange cover.”

Mansour says that increasing levels of legislation and compliance will make it hard for those smaller players to be successful in the complex world of structural defects insurance, although he does expect other market pressures to ease up once Brexit is out of the way.

“There is still high-demand for housing, and there is still a lot of developing going on despite the market taking a bit of a kicking of late,” he says. “If Brexit gets put behind us it will ease a lot of the pressures. The property market has suffered a bit from some of the international financiers sitting on their hands to see what happens with Brexit, and I know a lot of our customers are finding it difficult to get development finance at the moment.

“That will put a bit of a stranglehold on the construction market over the next year, but fundamentally banks need to lend money, people will always need housing and the construction industry will continue to chug along.”