Effective construction risk management should begin during the planning stage rather than immediately before a project starts, according to John Billis, Vice President of Aviva Risk Management Solutions at Aviva Canada. (Insurance Business)
Construction projects involve multiple exposures, including specialist equipment, difficult deliveries, crane movements, road or sidewalk closures, permitting requirements and coordination among architects, engineers and municipal authorities. As project complexity increases, insurers generally require more detailed documentation to understand these exposures and structure appropriate coverage. (Insurance Business)
One of the biggest challenges for insurers is not necessarily the availability of project information, but how early that information is shared. Contractors may spend months planning a development but approach insurers only immediately before work begins. This can leave insurers with insufficient time to undertake a detailed assessment of the project and its risks.
Billis said earlier engagement allows insurers to better understand the nature of a project and review engineering information, architectural plans, permits and other relevant documentation. The more information provided to the insurer at an early stage, the better the opportunity to identify exposures before they lead to losses. (Insurance Business)
Drawing on almost 30 years of industry experience, Billis said construction sites with stronger upfront risk-management practices generally demonstrate better loss experience. Aviva conducts thousands of risk assessments each year and also receives tens of thousands of claims, with many losses involving issues that could potentially have been addressed during a risk assessment. (Insurance Business)
Technology is also increasingly supporting loss prevention. Water-mitigation systems and sensors can identify leaks before they develop into major losses, while digital safety solutions and developments in worker health and safety can help reduce workplace accidents.
Risk management, however, does not always require large-scale programmes. Regular discussions about upcoming work and hazards can also strengthen site-level risk awareness.
A comprehensive risk assessment should therefore be one of the first steps before construction begins. Once exposures have been identified, contractors and insurers can consider whether individual risks can be eliminated, reduced, segregated or transferred. Protective measures can reduce the probability or severity of losses, while certain hazardous activities may be separated from other operations.
Insurance ultimately provides the risk-transfer mechanism for losses that cannot be completely prevented. Even well-managed projects remain exposed to unexpected events, and appropriate insurance can help ensure that a serious incident does not threaten the wider financial position of the developer or contractor. (Insurance Business)
The broader message for construction companies is that insurers should be treated as long-term risk-management partners rather than providers approached only when a policy is urgently required. Earlier collaboration can help insurers understand both current and future projects and develop coverage that better reflects the contractor’s actual exposures.
For insurers and underwriters, the approach also reinforces the importance of reviewing the entire construction lifecycle, rather than assessing risk only when physical work begins.
