Insurance premiums have risen by up to 500% in the last year and many subcontractors are finding it hard to bear the costs.
The current insurance crisis poses a real threat to the building industry. Hundreds of small-to-medium businesses could go to the wall because of huge rises in insurance premiums.

Roofers and scaffolders are bearing the brunt of the extra cost. One roofing contractor in the West Country with £4m turnover says its insurance had risen from £7,000 to £200,000 in only two years.

Edward Cowan, chief executive of the National Federation of Roofing Contractors says that most of his members had experienced rises for employers' and public liability of at least 200%, amounting to between 1.7% to 3% of total turnover.

The insurance industry blames September 11th and our society's newly acquired taste for litigation. Mergers and bankruptcies in the industry have also helped push up premiums by reducing competition in the marketplace.

These excuses don't cut any ice with Cowan, who says that the industry failed to take action earlier enough when faced with the burgeoning blame culture and tough employer liability laws. He blames insurers' greed for continuing to quote high-risk business at low premiums after these problems became apparent.

Cowan also argues, with some justification, that insurance companies are failing to differentiate between companies with clean claims and injuries records from those with a poor health and safety record. Cowan says that insurers should be taking a closer look at a firms' safety credentials to ascertain exactly how much risk it is exposing itself to.

Under Cowan the NFRC is now looking at creating a mutual insurance scheme where the costs of insurance are spread between members. Other trade bodies are also taking a pro-active approach. The Federation of Master Builders, for example, has negotiated a deal with Aon, which limits rises in employer's liability premiums to 17%.

The government has yet to offer any real reassurance for the sectors most badly affected. It calls for more single project insurance where losses are shared up to an agreed ceiling, but these are only really suitable for major projects.

In the short term the situation looks grim. Not every scaffolder or roofer will be able to absorb the sharp rises in cost and many will soon be tempted to leave the industry for a less risky vocation. This will have repercussions for the public building programme, which will be hampered by a severe shortage of specialist subcontractors if the problem of rising premiums isn't addressed soon.