Mark Jackson’s letter (7 January, page 30) raises a number of interesting points on Rudi Klein’s excellent article on single-project insurance (26 November, page 51). However, his final remark, “Rather than being Belgian, let’s be French!”, would have serious drawbacks.
First, as he correctly points out, project insurance is a legal requirement in France whereas in Belgium it is voluntary. It does not need to be compulsory and passing an act of parliament to implement it – even if desirable – could be extremely difficult.
Second, in the early 1980s, these forms of insurance effectively bankrupted several large French underwriters, which had to be bailed out by the French state at enormous cost. This came about as a direct result of shortcomings in the technical inspection bodies that represented the underwriters, who were openly encouraged to compete over fees and consequently cut too many corners! It is of crucial importance that UK underwriters do not fall into the same trap.
Third, and most significant of all, under the Belgian system, rights of subrogation are waived, whereas in France they are not and the French legal profession continues to make an excellent living trying to pin down the “guilty” parties.
So Rudi is right, the Belgian system is the way to go. What neither Rudi nor Mark mentions, however, is that these policies are not just fundamental to building integrated and efficient project and supply chains. They should – through empowering contractors to innovate and remove costs – also lead to the 30% cost savings called for by Sir Michael Latham and Sir John Egan.
John Goodall, FIEC (European construction industry federation)