The Construction Sector in 2021
Industry Insight: Laura Hancock, Director – Yutree Insurance
The construction sector has always been a good economic barometer. When the sector is booming, the economy is healthy, and vice versa. 2020/21 has not been quite so clear cut. The usual economic ebbs and flows were somewhat interrupted by Brexit. And then, out of nowhere, the economic impacts of Brexit were swept aside by the sudden onslaught of the COVID-19 pandemic.
Brexit has brought about new rules and regulations which have impacted the UK economy in the short term. Trade has been affected, labour shortages are upon us, and supply chains have been disrupted.
COVID-19, at times, shut down the economy during 2020. The IMF estimates that the global economy shrunk by 4.4% during this time.
The government and economists predicted a coiled spring, bounce-back recovery for the UK economy post-pandemic. What occurred was a role reversal between Brexit and the pandemic. Whilst some say that the pandemic masked the economic impacts of Brexit, now, whilst we are supposed to be bouncing-back, we are grappling with Brexit-induced labour shortages and supply-chain issues. And so, the perfect storm for the construction sector rumbles on.
During the pandemic, people stayed at home and there was increased consumer spending on home improvements, people wanting to move to larger houses and a desire to get out of the cities. There is still a large amount of pent-up demand following postponed construction projects during 2020. Post- Grenfell, there is an abundance of remediation work on cladded buildings to tender for. All good news for the construction sector, subject to buoyant supply chains and labour supply, along with the right insurance cover being available.
Looking to the future, the UK government is targeting net zero by 2050. Buildings are on the list of areas of the economy which will be targeted to achieve this net zero goal. Future homes, decarbonisation and game-changing solutions are all terms that we will come to hear more of in construction. The failed ‘Green Deal’ of 2012-15 can not be repeated this time around. The quality of contractors, products, design, and systems will be everything in achieving net zero in the UK. Another huge opportunity for the construction sector, again, provided the supply chains remain open and flowing.
In short, opportunities in the construction sector are plentiful. The challenge will be grappling an aging workforce, skills shortages, interrupted supply chains, significantly increased prices for construction products and materials, red tape, and consumer demand. Correctly advising and insuring the construction sector has never been more important.
Case Study – Contract Works cover for a client carrying out cladding remediation work
Our broker’s client was a contractor who was working on the external façade/cladding of a block of flats. The old cladding to be removed, did not meet fire safety standards post-Grenfell, and new cladding, was to go on.
We needed to see robust risk management processes in place in terms of the fire risk (i.e. storage of the old cladding in a lockable container/skip which is emptied regularly). Then we needed confirmation that the replacement cladding met with BRE 135 and BS 841 standards to be able to offer a contract works quote. The contract was worth in excess of £2m and we quoted for the full contract value, for the period of the works which was 40 weeks.
Contractors All Risks by Yutree
Yutree Underwriting has been helping brokers to place their clients’ construction risks for many years. One area of specialism for Yutree, which brokers can access, is our exclusive contractors all risks product.
Contract works provides cover for the works in progress, and the materials being used, against All Risks including fire, theft, malicious or accidental damage, and storm.
Yutree can quote for:
- Contract values up to £4m (higher limits available on referral)
- Contract periods up to 18 months
- Single projects as well as annual covers
Yutree’s contract works cover includes:
- The maintenance period
- Speculative buildings
- Show home contents
- Landscaped gardens and grounds
- Stock (including in transit)
- Temporary storage
In addition to contract works, Yutree’s product also provides cover for:
- Temporary buildings and site huts
- Own plant
- Hired in plant
- Employee tools and personal effects
Yutree has wide cover, low minimum premiums, quick quote turnaround times and provides same-day document issue. All quotes are provided on an exclusive ‘one quote to market’ basis, and capacity is A rated.
Can we help you?
Get in touch with us by email or 01638 660651 for a quote, more product information, or some advice about placing contract works insurance for your clients.