It was a genuine pleasure to attend BIBA earlier this month and a real tonic to (re)connect with friends and colleagues, old and new, in the UK broker market. This year’s conference built on the post-pandemic buzz of 2022 and carried this on to new levels. The sheer volume of delegates was astonishing and interest in Miller, our different specialisms and our exhibition stand was at times overwhelming!

Miller was represented by experts in a number of specialty areas; construction, professional indemnity for insurance brokers and MGAs, and our delegated authority solutions. My interest was exclusively in relation to construction where Miller’s new team is looking to develop relationships with regional insurance brokers with whom we can partner and provide our deep specialty knowledge and London Market access.

All successful businesses listen to their customers, so it was important for the Miller team to connect with the UK broker market and understand what issues are facing them and their end clients. This is a key advantage of attending BIBA; it was interesting to see that specific Miller products, developed to reflect the current construction market environment, continue to satisfy the needs of the sector.

Contractual Financial Loss (CFL) Insurance

Construction projects adjacent to rail infrastructure present a number of additional risks. It is for this reason that the infrastructure owner (for example, Network Rail) insists that the owner or developer enters into an Asset Protection Agreement (APA). These are normally onerous and non-negotiable, creating legal liabilities that are more extensive than normal common law position. These more extensive liabilities are often misunderstood, but the fundamental point is that normal TPL insurance will not respond to all obligations created by the APA. More information is available in our dedicated article on this subject.

Miller has the UK’s first facility for contractual financial loss insurance, which is specifically designed to provide additional protection for these additional risks that sit outside normal TPL insurance protection.

Insolvent Contractors

Construction has the highest rates of insolvency of all UK sectors and rates have doubled in just 12 months. A contractor insolvency mid-project can have catastrophic effects for a project owner.

It is still common for project owners to rely on the contractor to insure their project, as this can be (i) cost effective and (ii) the path of least resistance. However, if that contractor becomes insolvent, it’s insurances will most likely become immediately ineffective, leaving the owner with a tricky problem; how can I insure a partially completed building and how will this interface with any insurance that is implemented by the replacement delivery partner?

Miller has designed a solution that provides immediate standstill cover for the project owner, which then morphs into a construction insurance placement that runs to completion of the project once the replacement contractor has been identified and engaged. Download our fact sheet for more information please.

Owner Controlled Insurance Programmes (OCIPs)

‘Prevention is better than cure’ is a well worn medical maxim that has particular relevance to contractor insolvency. The solution outlined above is only the cure, but the problem can be prevented in the first instance but adoption of the correct insurance strategy at project inception.

As mentioned above, there remain significant concerns about contractor and supply chain insolvency in the UK construction industry. The frequency and severity of these insolvency events preclude an insurance solution with perhaps the exception of surety bonds (although that market will promptly object that these are not insurance products!). Nevertheless, a good project insurance strategy can mitigate the impact of contractor insolvency by immunising the owner against the immediate crisis that arises in the aftermath of a default.

We recommend the use of OCIPs from the outset of projects to ensure that the risk of uninsured, incomplete works is avoided from the outset, and does not require emergency measures on contractor insolvency. Of course, this is only one of many benefits of an OCIP. More information can be found by following this link.

How Miller can help

As a specialist construction practice with no network of retail offices, we partner with regional brokers across the UK to add value and respond to complex client challenges. We like to consider ourselves as an extension to your team.

From providing access to specialist London market construction facilities, developing innovative products to meet clients’ ever-changing needs and specialist risk advisory services that complement your offering, our broking partners know they can rely on Miller to deliver for them and their clients.

Get in touch with one our experts below to discuss any active or upcoming projects to see how we can help.