Issues facing the UK construction Market. What this means for Professional Indemnity Cover.

One of the United Kingdoms, Luxury-house builder have had to call in the administers, with staff being made redundant immediately.

With a recent notification, specifically relating to an entire project needing to be restarted due to groundwork issues, was ultimately the knife in the chest to the firm. Despite, the firms strong reputation within their industry, a lack of projects lined up, in part resulted in the demise of the firm.

Unfortunately, this is not an isolated case. Based on the statistics provided by Mazars, an estimated 4,370 construction companies were declared bankrupt in the past year alone. This is an increase of 7%, from 2021/22 & a further 76% from the prior year(s). A spokesman from Mazars, suggest that this may be persistent throughout 2024-2025.

There are several factors at cause for this. Inflationary costs to materials, shortage in labour, possible the wage-price spiral, which is likely to increase over the next coming months within the UK. Among other, micro & macros economic issues the UK & Europe are facing, such was higher loan rates, which may even prevent business from starting up all together.

This is, of course, very distressing for those working directly within the construction industry, as well as those who provide auxiliary services, such as insurers, brokers & claims services.

So, naturally, as a broker how is it we can look to assist in this circumstances?

Traditionally speaking, it would be Directors & Officers insurers who are keen to look into the “financial health” of companies. However, given the rise in companies being declared bankrupt, it would be use for Professional Indemnity insurers to understand this also.

Although, not directly mentioned within the articles below, those participating within the “Project Management” of the construction industry, are more likely to be stung with claims, due to either delays within the project & or not keeping on top of the budgets. Though, this is something I am sure they will be keeping a keen eye on.

Perhaps we may see a consolidation within the construction industry, as we have seen within our industry.

Times within the market are changing, in what feels to be an constantly shifting, and to quote the spokesman within the article references within, “Inevitably, when you go through cycles - such as the one we are in the moment, that can catch some people out”.

Ensure your in line with the beat and employ a broker keeping with the pace of these changes.

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