Scaffolders' Insurance, has the Bubble Finally Burst?
Back in 2011 FML released the following article and dare I say how accurate it seems to be when you look at the current pricing structure for high-risk trades, has the bubble finally burst?
For many years insurers have perceived that the risks faced by scaffolders with respect to injury to themselves or employees, injury or damage to a third party, combined with the loss or damage to their equipment determined that they traditionally have to pay higher premiums for their scaffolders insurance. This was generally higher than building contractors and ancillary trades for employers and public liability as well as all risks cover.
A large number of Scaffolders belong to the NASC (National Access & Scaffolding Association) but does this mean that they should receive discounted pricing than those that do not? What about those contractors who are pro-active when it comes to health and safety and putting in place adequate training and carry out a risk management program, do they enjoy discounted premiums better than those who just pay lip service to obtain a better price?
Many of the basic scaffolders liability insurance principles that usually would have differentiated a good scaffolding risk from an indifferent one seem to have been left by the wayside with many underwriters and insurers now offering online systems which simply just ask the questions but never really request any real evidence to assess that the scaffolding contractor actually takes the risks he faces seriously.
On the face of it, insurers only seem to take notice of a client when they suffer a loss, they then quickly decide that the scaffolding contractor in question must now present a bad risk. Many scaffolders may not be members of the NASC, many may only pay lip service to the health and safety issues and disregard their risk management but due to having suffered no losses they will also enjoy the same benefits as those who do take all these issues seriously.
It is also evident that those contractors who not only take their health and safety seriously and work hard in managing their risks but still suffer an unfortunate incident are likely to get penalised as insurers lose sight of the main principles of the risks.
Smaller businesses may also benefit by employing casual labour for short periods of time and sometimes are in receipt of free cover for their employer's liability insurance in respect to this. It is very likely that some of these employees may not have had the correct training in the jobs and tasks they are being asked to undertake and could be more likely to suffer or cause injury or damage as a result? When was the last time you saw an online quote facility ask about the level of competence of your staff?
In recent years some insurers, who in the past would not have entertained such risks, are now not only providing cover but are doing so at premiums the same or even less than they would have charged for a general building risk several years ago. Is this good underwriting practice?
It is true that perhaps the tighter regulations may be assisting the number of incidents in this sector of the industry, however, it just may be that the losses being incurred by scaffolding contractors may just be swallowed whole by a much more generous construction pot.
There is no doubt that eventually, the bubble will burst and then the scaffolding contractors will have to carry the can of higher pricing with insurers taking reactionary decisions in terms of policy pricing which could well affect some businesses ability to trade.
The insurance industry has been here before and it should be looking to return to some of the traditional values held within the liability insurance market. Restoring the need for hard evidence before allowing all scaffolding contractors to be treated equally when it is very clear that within any trade sector there will be good and bad risks.
Scaffolders need to fully understand and be made aware of the risks they're facing so they are able to make informed decisions and more importantly can take the steps necessary to try and prevent such incidents and losses and only then should the insurance industry support and reward those businesses that take it seriously.
At FML Insurance (update: now Primo plc) we believe the best way to place the correct scaffolders insurance for our client is to understand the clients' needs. FML, therefore, offer a no-obligation service to all our clients to talk to us so they can be made aware that a cheap premium today may not be what is best in the long term especially concerning the cost of their premiums.