The biggest challenges facing the construction insurance sector have to do with water.
That’s according to the COO of Totten Insurance Group, Denis Dei Cont, who highlighted the intensification of urban areas where utilities and services are coming under increased pressure from growing populations.
Learn more about environmental impairment liability insurance here.
“I can recall seeing claims where water came backwards from the sewer system up onto the roof, that tells us we’re not ready for a flash flood,” Denis Dei Cont said. “It’s not just because of the sewer system, it’s because the city is getting bigger and bigger and there’s nowhere for the water to go.”
Insuring construction means taking into account that the more populous the city, the greater the pressure on its infrastructure.
“Especially in large urban centres like Toronto, we’re building multi-story residential and office units, where there were lower rise buildings before and that creates strain on the systems for sewer water,” Dei Cont said. “It seems every time we have a huge rain storm we have huge issues with water.
Interestingly, Dei Cont said water damage was a far greater risk to construction insurers than the foreign home buyers’ tax in B.C.
“In Vancouver there’s such a demand for space, if I was a betting man I’d say it might slow it down a bit but I think it’s going to continue as it has,” Dei Cont said.
Dei Cont pointed to the “acceptance of higher and higher number of storeys and height of frame” among structures in Ontario and B.C as an emerging issue in covering construction.
Underwriters are unsure what to expect from contractors, posing a hurdle for risk evaluation.
“The concern is it’s something new,” Dei Cont said.
“Water damage is probably the biggest peril in non-frame risks, not necessarily sewer back-up with infrastructure,” Dei Cont said. “Whether it’s the speed of construction or mistakes being made, we are seeing water damage being the biggest peril by far.”
Dei Cont advised brokers to understand the experience of their clients, and have knowledge of the surety business even if you’re not selling the product directly.
“It’s not clean and simple - deal with markets that understand the business,” Dei Cont said.
Related stories:
.jpg)
