Brokers need to be involved in construction projects involving their clients as early as possible to help navigate risks and exposures, an expert has said.
Angela Vella, practice leader of construction at Arthur J.
Gallagher, said that brokers need to be involved in construction projects from their inception as the more time they have with a project, the better job they can do for their client.
“It is really important in terms of construction to get involved when these contracts are being negotiated,” Vella told
Insurance Business. “You can help clients understand what their risk allocation looks like, help them come up with risk transfer strategies and effectively try and manage their risk in the best possible ways.”
With emerging risks around technology and economic liquidity joining more traditional risks for construction clients, brokers must ensure that any construction product they recommend to clients is fit for purpose.
“In terms of underappreciated risks for clients and brokers, I find that it does vary broker to broker and then client to client. It also comes down to sitting and trying to explain to clients what you feel the risks to their business are and how much notice they take of that so it does change,” Vella continued.
One area of changing risk is on the legislative front. With the New South Wales government decision to scrap the fire and emergency services levy impacting construction clients, other areas of legislation have fallen under the spotlight. For example, amendments to the Building Act last year offer some uncertainty to construction clients which brokers should also monitor.
“We are still working through those changes with clients to understand whether that is going to increase or decrease their exposure for Commonwealth funded contracts,” Valla continued.
Vella stressed the importance of risk profiling exercises for construction clients as the best way to help clients understand their insurable and uninsurable risks, their various exposures and the impact on their balance sheet if plans go awry.
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