In Malaysia, insurance brokers and agents are increasingly encouraged to clearly communicate the importance of adhering to the specific conditions of contractors’ all risk policies.
This call to action was emphasised by Michael Chen (pictured), director of engineering and construction risks at Crawford Malaysia, during an industry seminar held in Singapore.
Chen pointed out that failing to meet these special conditions could lead to policies being considered void, which often catches insured parties unaware. He noted a concerning trend where insured parties meet some, but not all, of the required conditions, jeopardising their coverage in the event of on-site incidents.
“There are many brokers and agents who do a top job of educating their clients but, unfortunately, we are seeing more and more cases where the insured has complied with some but not all of the special conditions; that’s just not enough to protect yourself and have your insurance policy respond in the case of a loss on site,” he said. “Some of these special conditions are very simple to comply with, such as having signage on the construction site that states, ‘No Trespassing’.
“I see it, time and time again, where insureds comply with the conditions that are more complex to comply with, and yet don’t realise there is a suite of other very simple things they must also do. This tells me it’s a knowledge gap amongst insureds. But it also means, it’s a really easy win for brokers and agents to showcase their value to their clients.”
Chen argued that this knowledge gap represents an opportunity for insurance professionals to enhance their client relationships by educating clients more effectively.
“I can assure you that the clients of brokers and agents who fully understand the policy they’re purchasing, and what they need to do to ensure they’re covered in the event of a loss, are much more likely to repeat business with the same broker or agent,” he said.
Chen also shared insights on the consequences of non-compliance, such as substantial financial losses following fires, where policyholders discovered their lack of coverage post-incident.
“Claiming ignorance around these special conditions doesn’t often help insureds, nor does hindsight. Insurers certainly do not go out of their way to deny claims, and brokers and agents want satisfied customers,” he said. “I would go as far as to say that I see non-compliance with special conditions on the majority of the construction sites I visit, and that ought not be the case. There are instances where insurers will still pay even when the insured has not complied, but you don’t want to take that risk – comply and you’re covered; it’s as simple as that.”
