Construction cover cost cuts a 'ticking bomb'
- Date: 02/04/2009
A trend among property developers to cut back on construction cover in order to lower costs is a ‘ticking bomb’, it has been claimed.
Simon Main, managing director of construction defects insurance specialist BLP, has claimed that the economic downturn has led to developers scaling back their cover to save money – a decision which could cause future problems for the sector.
Mr Main said: “Not having the right kind of cover is a ticking bomb. The increasing pressure to cut costs has been changing the dynamic in the sector.
He added: “This can mean a flight from quality and protection. Now is not the time for companies in this sector to take on further risk. It is a trend that will leave companies increasingly exposed if they assume more and more risk as they look to shed or cut back on cover.”
Mr Main also said that the right kind of cover would make developments more suitable to customer, reduce exposure to risk and help protect stakeholders.
He concluded: “It's a tough time for construction but the shoot-from-the-hip tactic of cost cutting on cover will come back to haunt those who try this route. Developers, landlords and future tenants just don't know what's in store for them – and this is going to be a major problem.”
BLP Insurance provides latent defect warranties for buildings.