Home building may be delayed as engineer insurance costs spiral

Exit of UK insurance underwriters who dominated professional indemnity market

Industry figures say builders are facing sharp raw material price hikes amid shortages of timber, steel, insulation and other supplies. File photograph: Getty

Industry figures say builders are facing sharp raw material price hikes amid shortages of timber, steel, insulation and other supplies. File photograph: Getty

 

Engineers Ireland officials warned the Oireachtas finance committee on Wednesday that delivery of homes and other construction projects could be hit because engineers who carry out fire-safety inspections face mounting insurance costs.

Vice-president of Engineers Ireland John Power said a number of UK insurance underwriters that dominated the professional indemnity market had withdrawn from the Republic, while others had hiked premiums as the industry deals with the aftermath of Brexit, Grenfell Tower fire in London in 2017 and 2018 collapse of UK construction group Carillion.

Committee member Mairéad Farrell (SF) told the hearing that one fire-safety company that had contacted her saw its premium for professional indemnity coverage jump from €2,500 in 2019 to €7,000 last year. While it was initially unable to secure a quote for this year, the insurance company ultimately returned with a price of €65,000.

Michael Lyons, chairman of Engineers Ireland’s fire and safety unit, said many members of the organisation are saying that quotes for policy renewals have “trebled or quadrupled” so far this year. Moreover, underwriters are also narrowing what the policies would cover, he added.

“If the current trend persists, after a year of renewal notices, there will be relatively few firms in a position to offer fire-safety certification design and of construction,” said Mr Power.

“This will impact the approval of designs, commencement of projects or the handover of completed projects such as houses, flats, nursing homes and factories. The inevitability is that the construction sector will suffer significantly and there will be a significant number of job losses as professional level,” he said.

The warning comes as construction in the Republic is only beginning to ramp up following more than three months of virtual lockdown amid the Covid-19 pandemic.

Meanwhile, industry figures say builders are facing sharp raw material price hikes amid shortages of timber, steel, insulation and other supplies. This is being fuelled by global demand spikes and coronavirus-related bottlenecks, as well as issues relating to Brexit.

Motor insurance

Separately, Axa Insurance Ireland chief executive Philip Bradley told the committee that the largest provider of motor insurer in the Republic, with a 30 per cent market share, reduced motor premiums by €80, or 12 per cent, on average for customers renewing coverage in April.

This was on foot of new Judicial Council guidelines, paving the way for personal injury award reductions coming into effect at the end of last month.

The general manager of US insurer AIG’s Irish business, Aidan Connaughton, said his company had “already begun to implement rate changes as a result of the anticipated benefits” via the guidelines.

Senior executives from insurers Aviva Insurance Ireland, FBD and Zurich Insurance appeared before the same committee last week.