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Call to address insurance woes

A report commissioned by the Department of Trade and Industry calls for a full survey into the insurance crisis facing contractors

A CONFIDENTIAL Government report into contractors' insurance grievances is calling for an industry-wide survey to discover exactly how much premiums have gone up.

The Department of Trade and Industry-commissioned report, called A Scoping Study Looking at the Difficulties Construction Contractors Face in Obtaining Insurance, will be fed into a wider review being carried out by the Department of Work and Pensions.

In the report seen by Construction News, contractors surveyed suffered increases in employer's liability insurance of between 10 and 368 per cent and public liability insurance between 10 and 500 per cent.

The report acknowledges insurance hikes had a major impact across construction with 'high-risk' trades like roofing the worst hit.

But the Government conceded that an accurate picture of the crisis would be impossible without a full survey.

Fears of firms ceasing to trade, trading illegally and reclassifying their businesses to general building while carrying out specialist tasks were also highlighted.

More worrying trends included companies reclassifying staff as self-employed to reduce premiums or obtaining an insurance certificate and then cancelling payment.

According to the report, companies with good claims records were able to obtain cover but at much higher rates and with restrictions. Contractors said the sharp rises seen in 2002 were unjustified, given the claims records, and that not enough notice was given that premiums would go up.

One trade body boss claimed insurers ran their businesses by double standards.

He said: 'Even companies with no claims for 12 years have seen large premium rises. A good claims record works against contractors because the insurers say 12 years is a long time - you must be due for a claim.'

The report, produced by consultant Davis Langdon, surveyed 12 contractors working in specialist trades, civil engineering and general building, two insurers and two brokers. Seven trade bodies were consulted.