GOING FOR GROWTH

Neon Mavromatis, Managing Director Construction, reflects on the outlook for construction firms and their construction insurance needs heading into the Winter

As the latest monthly construction statistics from the Office for National Statistics hit the mainstream and business press, the headlines seem to be unequivocal – whether it is cost, supply or demand, these are certainly turbulent times for construction. The summer, a historically quiet month for news, has been awash with increasing calls for support for post-Brexit improvements to supply chain challenges and skills shortages. And yet the headlines of major contract awards from infrastructure to a post-pandemic housing boom persist too.

As we head into the winter Neon Mavromatis reflects, “It’s perhaps too tempting to get caught up in the headlines. We know there are talented leaders running construction businesses large and small throughout the sector. Whatever the business challenge we all know it’s about resilience and adapting to manage out unwanted risks and reduce incident levels.

Whilst we can’t help with the costs of raw materials or labour supply, we can advise on the right levels of insurances that your business needs in the current market.” The latest ONS construction data points to sustained sector wide growth in the quarter despite Brexit and the challenges still being felt due to Covid-19. Whilst overall output declined in June 2021, in contrast quarterly output (Q2 Apr – Jun) grew by 3.3%*. It will come as no surprise that new work in Infrastructure projects as part of the Government’s commitment to its “levelling up agenda” was a major contributor to output and all repair and maintenance sectors, except for public housing, were trending above February 2020 pre-pandemic levels.

Perhaps some of the most keenly felt challenges are in construction supply chains. In a second quarter statement by The Construction Leadership Council it reports that there has been some limited respite for supply chains most likely due to the holiday season and a softening of consumer confidence leading to postponements of domestic projects.** However, the latest state of trade survey by the Civil Engineering Contractors Association reports that 73% of firms are experiencing supply chain issues, up from 29% in Q1***, in part due to a well-documented shortage of lorry drivers. Anecdotal evidence from ONS survey data points to this shortage being in part responsible for the increases in raw materials that manufacturers are passing on. “Evidence received from responses to the Monthly Business Survey for Construction and Allied Trades for June 2021 suggested a limited availability of certain construction products, most notably timber, steel, cement and tiles. This, in turn, is likely to have contributed to the price rises experienced in recent months in the industry.”

In considering the opportunities looking forward, Mavromatis comments: “I have a great deal of confidence that the sector will continue to be part of the UK’s post-pandemic recovery. As ever we continue to work closely with our clients as they adapt and evolve their businesses and looking forward our construction team will continue to approach your insurance needs holistically. It’s because we have an integrated offering combining public liability, performance bonds and professional indemnity to name just a few, that you can be assured of a comprehensive approach.”

* ONS Data - Construction output in Great Britain: June 2021, new orders and Construction Output Price Indices, April to June 2021 ** Construction Leadership Council - Construction Product Availability Statement (24 August 2021) *** CECA: Contractors Report Record Cost Pressures and Supply Concerns

KERRY LONDON CONSTRUCTION INSURANCE

Kerry London’s construction expertise and services enable us to offer insurance advice on the widest range of construction projects. From civil engineering, demolition and tunnelling, to housebuilders, refurbishment and property maintenance, we provide deep expertise and insurance market knowledge to meet the needs of our construction clients. This ensures that we deliver competitive pricing and high-quality covers through an approach that includes: • An integrated solution including Performance Bonds and Professional Indemnity • Direct presence in the Lloyds and Specialist Insurance Markets • Dedicated London market broking team

Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s accredited broker which means that we work with a wide range of niche and major insurers.