Construction claims on the up, says JLT study

Research shows that despite recent changes introduced to improve the way civil claims are handled, insurance claims within the construction industry have risen sharply compared to a similar research conducted in 2014.

JLT’s 'Employers’ Liability Claims Benchmarking' report surveyed 25 of the UK’s largest building and civil engineering contractors, analysing their insurance claims over a five year period between 2009 and 2014. This was then compared to similar research carried out in 2014 which looked at claims made between 2007-2012.

Against a backdrop of civil litigation reforms introduced in 2013 following the Jackson Report, JLT found that claims made against construction firms between 2009-2014 increased by 19%, compared to research carried out two years earlier. By contrast, the average cost of claims fell during the same period – down three per cent from £24,306 in 2014 to £23,700 in 2016 – possibly an early indication that the reforms are successfully managing to halt the increase in claims inflation.

The average time it took to settle a claim also rose significantly – up 11% from 916 to 1,007 days, which could be a consequence of the changes to claimant solicitors’ business models as a result of the Jackson Report which has subsequently increased caseload numbers.

Dave Cahill from JLT’s Construction Team, said: “Given the reforms introduced in the Jackson report, the rise in claims frequency is surprising. It is unclear whether these legal changes are working effectively for major UK contractors, and it’s possible we may not see this reflected in the data for another couple of years. Contractors hoping for an immediate improvement in the claims landscape are clearly going to be disappointed.

“Whilst this period of uncertainty continues, our advice to building contractors is to use claims defensibility techniques to identify any weakness in the claims process and deliver improvements to procedures. This will ensure that claims leakage is kept to a minimum and that the total cost of risk is minimised.”

Related Articles