Federation plans to announce details of cut price cover for vetted firms at its annual meeting next month
The National Federation of Builders has negotiated a deal with an unnamed insurance company to provide affordable employers' liability cover for members.

The package will be unveiled by the NFB at its annual meeting in London on 18 June.

The agreement has been reached because of widespread concern over the cost of obtaining cover. Premiums for specialist contractors in the roofing and scaffolding sectors have increased by as much as 500%. This has led some firms to trade illegally and others to consider winding up their businesses.

Insurers say premiums have been too low for several years and that the number of claims has increased in line with the development of a "compensation culture". They also say rises in premiums were inevitable in the aftermath of the attack on the World Trade Centre.

NFB chief executive Barry Stephens refused to be drawn on the details of the agreement but said it would provide "real value" for members.

It is understood that the federation's deal could be linked to an industry "passport scheme". Under this, contractors would have to pass stringent on-site health and safety audits to demonstrate that they ran low-risk operations before they became eligible for the insurance cover.

The scheme may operate in accordance with standards drawn up by the Association of British Insurers for trade associations based on the existing Construction Health and Safety scheme.

The Department of Work and Pensions is reviewing the question of employer's liability cover. Many construction trade associations have sent written submissions stating their concerns.

  • In a separate development, Building has been contacted by several small subcontractors that are considering whether to merge in order to overcome the problem of premium increases. The firms, which wish to remain anonymous, say they could spread insurance premium costs in the short term if they merge.

    One contractor said: "Things have got so desperate that we have got to the stage where we have to merge just to stay afloat. The alterative is to trade illegally and none of us wants to go down that route."