There’s so much complexity that goes into a single construction project. From specialist equipment to difficult deliveries, mobile crane manoeuvres and sidewalk closures, there’s a myriad of elements that present unique challenges for all parties involved - especially insurance.
In a recent interview with Insurance Business, John Billis, VP of Aviva Risk Management Solutions (ARMS) at Aviva Canada, explained that proper coverage requires a mixture of timely documentation and contract adaptability.
“The more complex a project, the more documentation that’s required,” he explained. “At Aviva Canada, we focus on the whole construction lifecycle while also simplifying the differing needs and requirements of an insurance policy.”
The goal for insurers is to ensure the right protections are in place from the earliest planning stages throughout project completion - and that starts with thorough documentation.
“[When it comes to documentation], it's critical to really understand the nature of the project,” added Billis. “You have engineers and architects involved, there’s city and municipal planners [as well as] permits that’re required to even start projects.”
However, the biggest hurdle here isn't necessarily the availability of information, it's when insurers receive it, with contractors often completing months of planning before turning their attention to insurance. This, in turn, leaves little time for a detailed review.
“If insurance isn’t brought up early on in project planning, we can see contractors waiting until the last minute to send through their documents,” said Billis. “They’ll say, ‘Oh, we also need to get insurance for this project now - oh, and by the way, the project is starting tomorrow morning’. [Essentially], the more documentation that’s available and shared with the insurance carrier earlier, the better.”
And as someone who’s been in the industry for almost 30 years, Billis is certain of one thing; projects which invest in upfront risk management see fewer and less severe claims.
“I can tell the difference between a job site that’s well-run, that has good risk management practices in place and ones with less formal practices in place,” Billis told IB. “We’ll also see it in our loss trends too. We do thousands of risk assessments every year on different sites, we also receive tens of thousands of loss claims. A lot of these claims are preventable losses or issues that we would talk about when we do our risk assessments.”
Technology plays an essential role in this part of the process too. Billis went on to tell IB how water mitigation systems and sensor technology can detect leaks before they become major losses, while digital safety tools and innovations in worker health and safety are helping reduce workplace accidents.
And training here doesn’t need to be huge, mandated events – even the smaller, less intensive steps towards risk management can significantly pay off at a job site. For Billis, that simply begins with sitting down and having a conversation on what’s being planned for the week ahead.
For developers or contractors looking to make their projects more attractive to insurers, there are a few steps they can take now to mitigate any issues they may encounter down the line. As Billis revealed, the first component is a comprehensive risk assessment - developing a clear understanding of the project and identifying potential exposures before work begins.
Once those risks have been identified, the next step is determining how they can be controlled. In many cases, the goal is to eliminate the risk entirely. Where that isn't possible, contractors can reduce the likelihood by introducing protective measures or separating higher-risk activities.
“How do we control them? Can we eliminate them? Can we reduce the risks by putting different protections in place? Can we segregate that risk or can we transfer that risk?” said Billis.
Even with the strongest prevention measures in place, some level of risk will always remain - which is why that transfer element is so essential. Once a team has identified and managed every foreseeable exposure, insurance provides the financial protection needed for the unknown.
“Bad things happen even if we did our best to try to control the unexpected,” added Billis. “Risk transfer almost acts as a financial guarantee that if something does happen, the developer will have the support needed to be able to move forward and it not have an impact on their business as a whole.”
And, just as importantly, contractors should think of their insurer as a long-term business partner rather than a last-minute service provider.
“[At Aviva Canada, it’s about] making sure that the insurance provided is suitable for their needs and also that we know who they are, what projects they're involved with and what projects are coming in the future. It’s all about building more of that business relationship instead of a last-minute transactional approach to getting a good insurance policy.”
Learn more about Aviva Risk Management Solutions
This article was created in partnership with Aviva Canada
