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The devil is always in the detail and not the price

The demise of Quinn Insurance Group has done little to buoy the spirits of the construction sector.

The insurer was renowned for undercutting the market and providing customers with highly attractive premiums that were significantly lower in price than any other.

The reality of Quinn’s actions is beginning to show as firms seek insurance renewals. While many companies will be struck with an unwelcome hike in insurance premiums, Quinn’s decline into administration has also highlighted a number of important issues when insuring buildings, sites, people and businesses.

The first issue is to ensure that you have sufficient reserves in place to cover any future liabilities. With the public administrator stating that no more funds will be placed into the Quinn pot, if you do have exposure to the insurer then it’s vital you create a budget line to cover all eventualities.

Considerations

It may be stating the obvious, but do your homework. Comparing quotes and browsing the market through a reputable insurance intermediary is always crucial. More importantly, you should always look into the financial stability of your insurance provider to ensure they have adequate capital requirements to guard against insolvency.

While the Financial Services Authority (FSA) is charged with monitoring the performance of companies, there are some that can slip through the net. The introduction of Solvency II in January 2013 will help to protect businesses and consumers against the collapse of insurance companies, but the key is staying one step ahead by doing a little investigative work of your own.

Aside from considering the commercial viability of the provider, it’s essential that you make sure that the cover matches what the company needs. It’s vital that all business activities are included under a policy and that you check there are no issues with policy wordings. It’s also worth considering whether the ‘limits of indemnity’ are sufficient to meet any contractual requirements and whether they fully protect the company against actions in an increasingly litigious world. If the insurance is purchased purely on price alone, it could lead to significant gaps in cover.

All insurers also take account of quality risk management standards. An insurance broker, which specialises in the construction sector, will assist in helping to reduce insurance costs by incorporating ‘low claims rebate’ and ‘long-term agreement’ clauses into a policy. This rewards companies that take positive steps when it comes to health & safety and site security issues.

Sean Killingbeck is a director at CBG Insurance Brokers part of CBG Group

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