Analysis of industry data by Mactavish, the specialist outsourced insurance buyer and claims resolution expert, reveals that 44,430 UK construction firms closed in 2020. This was 4.16% higher than in 2019, 18.42% higher than in 2018, and 21.54% more than in 2017. Only 37,485 new construction firms that launched in 2020, 26.2% lower than in 2019.
Mactavish says one of the reasons why more construction firms are closing is because insurance premiums are increasing dramatically, and a growing number are finding it difficult to pay these and may close as a result. It says there has also been a considerable erosion in the quality and extent of the cover provided by insurers.
Bruce Hepburn, CEO, said: “The COVID-19 crisis has had a devastating impact on the construction industry. As the risks facing the sector increase and insurers are generally increasing premiums to improve their margins, many construction firms are finding it difficult to pay their premiums. Some are having to cut back on the quality of their cover or on their operations, and for some it is the final nail in the coffin. However, there are ways you can reduce premiums and also improve the quality of cover, such as having two brokers pitch for your business along with their preferred insurance partners, as opposed to just using one broker, which is what most companies do today.”
According to recent reports, UK commercial insurance pricing has surged by over 40% across the board, with construction companies being particularly badly affected. Despite this Mactavish says that on some of the tenders it has run on behalf of clients, premiums have fallen by over 30% against the estimates given by incumbent brokers.
Hepburn added: “In a hard market, you shouldn’t see buying insurance as a procurement decision, Instead, you need to understand that you are seeking capital from insurers and approach your renewal on that basis. You must ask yourself: how can I help my firm stand out? How can I communicate how we manage and mitigate risk so that we get the best possible terms from underwriters?”
More at: https://www.mactavishgroup.com/
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