“Worker to worker” claims on construction sites, driven by an increasingly large mental health component, are now a big issue for insurers and brokers. According to industry reports by Marsh, Aon and Steadfast, these claims can account for between 30% and 50% of the total value of liability claims in construction portfolios. For insurance brokers, understanding the drivers behind this trend and implementing effective risk management strategies has become essential for both client support and portfolio profitability.
One reason for the very sizable and growing claims load: the term “worker to worker” that’s relevant to liability on a construction site is very broad. The term can include any scenario where one worker’s actions cause injury to another, regardless of their employment relationship, including those with the main contractor and subcontractors.
Another major reason that these claims are so significant is because they often involve liability disputes between different employers’ insurers. They can also trigger cross-claims or indemnity claims between companies.
A major causal factor in the prevalence of “worker to worker” accidents and injuries is the changeability of a building site - they can be uniquely challenging for a broker compared to more predictable sectors. “Due to the building work, the site is literally different from one day to the next,” said Simon Garske, head of construction at Mirabelle Underwriting.
Construction sites are dangerous places because of moving parts, people, heavy equipment, sharp objects, height challenges and constantly changing conditions. The risk of injury claims from workers and subcontractors is a constant issuee that brokers need to carefully risk manage. “Our approach is to be proactive and work with brokers to really try to understand how construction safety and worker wellbeing is being addressed on site and, importantly, how these steps are being documented,” said Sydney-based Garske.
Brokers can help construction site risk managers foster a safety conscious culture and ultimately help site managers to take concrete steps that improve safety and bring down claims numbers and insurance costs. However, one challenge can be making sure the construction firm’s compliance with regulations is not just a box ticking exercise.
“We understand the administrative burden that construction sites need to handle,” said Garske. “As underwriters we're looking at a broker’s submission to see whether there's actual evidence that the construction company has good risk management systems in place and they are not just simply ticking a box saying they have a compliant OH&S framework.”
Underwriters need to see evidence that the construction firm is proactive about achieving better safety on site. There are different methods brokers can suggest to construction clients to make sure a safety-conscious risk management culture prospers. “Evidence that site diaries are being used to record site inductions, visitors to site, toolbox talks, near misses and reporting of accidents is a really good sign of a well-run site and project,” said Garske.
He said there are also “excellent digital tools” available now. “Workers use QR codes or their phone to sign on site each day,” said Garske. Apps can also be used to store any legally required Safe Work Method Statements (SWMSs) and emergency contacts – and make them easily accessible to workers.
But brokers can also encourage a more old school approach. “Site diaries can be paper form and these, too, work well as long as there is a good system to save them,” said Garske.
These risk management and recording methods also mean documentation is available when an incident or accident takes place. “Almost like a story of what happened on site and who was present,” said Garske.
Documentation helps prevent information deficit issues in a claims process, particularly when a claim is long tail. “In many instances, worker injury claims don't come to light until several years after the actual event,” said Garske. “Key managers and staff who worked on the project at the time, may have moved on to other projects or even left the company.”
He said in these situations the site records provide critical information. Without them even very basic knowledge is hard to confirm. “We understand that a common theme on a contentious claim is often trying to understand if the claimant was at the site on the day of the incident,” said Garske. “It is in everybody's best interest to finalise claims as quickly as possible and this site-diary information is extremely helpful.”
Rather than the number of accidents and physical injuries on construction sites – which have remained relatively stable in recent years - it’s mental stress-related claims that have gone up astronomically, some sources suggest by 97% in the last decade. Their contribution to the cost of claims is still only about 10%, but the trend is strongly upwards.
1. Promote a proactive mental health culture
Encourage leadership buy-in: Advise clients to have visible support from senior management for mental health initiatives.
2. Advise on mental health policies and procedures
Develop reporting and support procedures: Ensure there are confidential channels for workers to report stress, bullying, or mental health issues.
3. Recommend employee assistance programs (EAPs)
Advocate for EAPs: Suggest clients provide access to professional counselling and support services for workers and their families.
4. Encourage mental health training
Mental health first aid: Encourage clients to have trained mental health first aiders on site.
5. Support work-life balance and fatigue management
Advise on rostering: Help clients review work schedules to avoid excessive overtime and fatigue, which are linked to mental health risks.
Are you a broker in the construction industry? What claims challenges do you face? Please tell us below
