In the years following the Brexit referendum, the construction industry has had to face a number of challenges, including the fallout from the collapse of Carillion, skills shortages, and COVID-19. It would be an understatement to say the construction industry has been hit hard.
The Brexit trade deal has now been effective since 1 January 2021, which has meant construction firms have had to comply with a whole new array of rules and regulations. But what new risk exposures will these firms now need to consider?
1. Skilled workers
Previously EU member state passport holders were able to secure employment without any specific visa requirements. However this is now to be replaced with a points based system which will require a specific skill qualification as a well as a minimum income threshold and a suitable job offer in place. As the government looks to reduce the number of low skilled migrants coming into the UK, it’s likely to cause a knock-on effect in supply and demand where ‘cheap’ European labour would typically plug this gap. It won’t be surprising to see an increase in construction costs and more lengthy project durations as a result.1
2. Supply chain issues
The newly updated Border Operating Model sets out the new rules for import and export of goods across the UK and EU. Constructions firms will need to familiarise themselves with these rules. They will also need to be fully prepped for cross-border trading in order to minimise delays in moving construction products to site.
3. Construction products
The UKCA (UK Conformity Assessed) marking is a new UK product marking that is used for goods being placed on the market in Great Britain. This means firms will need to prepare for an end to the current recognised CE mark and switch to a new UKCA marking by 1 January 2022.2
So, 2021 may prove to be a difficult year for construction firms, and they will need to be ready to embrace big changes.
For Professional Indemnity insurers, particular areas of focus will be around contractual drafting; the handling of contractual disputes; how firms are adapting to the new rules; how collaborative they are willing to be with their supply chain to resolve issues quickly; how prepared a firm is to deal with insolvency within the supply chain; and, finally, is their workforce sufficiently skilled relative to the projects being undertaken?
The more detail that insureds can provide around their changing working practices, the more it will help in securing the most favourable terms.
Professional Indemnity cover
At CNA Hardy, we have a specialist team of underwriters across the UK and Continental Europe; over 20 industry specific wordings solutions; and Lloyd’s capability to write broker wordings. Our Professional Indemnity cover is tailored to meet the needs of the individual client and is backed by our consistently high independent financial strength ratings.
Find out more about our specialist PI capabilities, core appetite and covers here.
Natalie Boardman
Underwriting Manager Professional Indemnity