First, some roofers have experienced rises for employers' and public liability of up to 1500%, and most were being quoted 200% increases or more. The percentage of turnover premiums represented could be anything from 1.7% to 3% – often a contractor's entire profit margin.
Second, even though most roofers submit their renewal applications early, underwriters, apparently working in collusion, have been pleading lack of capacity and refusing to reinsure until five minutes past midnight.
Third, many companies with clean claims and injuries records have been treated no differently from those with indifferent records.
The NFRC's accident survey received replies from 59% of our member contractors. They reported that, between them, there had been one fatal fall from height, compared with 37 reported by the Health and Safety Executive for the construction industry in 2001-2. This was one too many, but the results also showed that there were only 20 serious injuries reported by NFRC members and a mere 2704 days were lost because of accidents and work-related illnesses among 9750 employees. We therefore have the statistical evidence to back up our claim that not all roofers are high-risk bets.
Underwriters, in their pursuit of profit, and led by mavericks such as Independent, quoted for high-risk business at low prices
Why is it then that insurers have behaved in such a grossly unfair manner? Is it because of incompetence on their part or because of outside factors they could not foresee? Granted, nobody but our intelligence services should have seen 9/11 coming. But claims by employees – encouraged by ambulance-chasing lawyers and tough employer liability legislation – have been rising for a long time, as have claims for work-related illness. Instead of taking pre-emptive action, underwriters, in their pursuit of profit, and led by mavericks such as Independent, continued to quote for high-risk business at low premiums. A reaction of disastrous proportions was bound to follow.
Although there will always be contractors that do not conduct business in a competent fashion, there is no reason why the insurance industry should not behave in a more discerning manner. The characteristics that mark out the professional roofer from the cowboy are obvious. Here are a few points that insurers should ask contractors before deciding on the level of premium to charge:
- Does it carry out risk assessment on every contract undertaken?
- Has it appointed a director or senior person to take responsibility for health and safety?
- Does it have a daily briefing for its complete workforce?
- Does it issue NFRC safety passports?
- Does it have a policy of listening to employees who have health and safety complaints?
- Is its workforce part of the Construction Skills Certification Scheme card system?
- Does it use bona fide subcontractors that are properly covered by their own employers' and public liability insurance?
There is nothing to stop an underwriter demanding an independent audit of these points.
With this crisis still at full tilt, what has the government done to help? Nothing, as far as I can see. The DTI has asked for statistical evidence from high-risk industries, which it is about to receive. Meanwhile, the Treasury is happy with its take from the 5% insurance premium tax. Perhaps it should use the money to create a fund to meet the cost of long-term industrial illness?
Edward Cowan is the chief executive of the National Federation of Roofing Contractors.