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Construction Industry (Liability Insurance)

Volume 405: debated on Thursday 15 May 2003

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To ask the Secretary of State for Trade and Industry if she will make a statement on the work being carried out by Davis Langdon Consultants on insurance in relation to the construction industry; and when Davis Langdon Consultants will be reporting their findings to her Department. [112833]

[holding answer 12 May 2003]: Following representations received from the construction industry about the difficulties being experienced in obtaining insurance, as part of its sector sponsoring role within DTI, Construction Sector Unit (CSU) commissioned Davis Langdon Consultancy (DLC) to:

establish the nature and extent of the difficulties contractors face in obtaining a range of different types of insurance;
provide a clearer understanding of the reasons for the problems facing construction firms in terms of both insurance market aspects, operational practices and developments within construction itself, and;
suggest how the industry could better represent its approach to risk assessment, management and control to the insurance industry, in ways that would help insurers better assess premiums.

DLC was awarded the project following competitive tender. The project brief was designed as a 'scoping study' to provide a broad overview of the issues relatively quickly, rather than an in-depth analysis. Commenced in mid November 2002, DLC's report was submitted to the Department on 19 February 2003. The timing of the delivery of the report was in part dictated by the deadline for contributions to the DWP Review of Employers Liability Compulsory Insurance (ELCI). Copies were issued to study participants, and officials leading on insurance matters at the OFT, DWP and Treasury, and since then to inquirers on request. Some minor amendments on points of detail have since been made in response to requests from two study participants and an amended version will be lodged on the DTI website in the next few days.

The Department welcomes the report as providing a perspective on construction—specific aspects adding value to the work of the other studies in the area, and concurs with its general thrust. It is not intended, and should not be taken as pre-judging the outcome of the DWP and OFT reviews which are due to be completed shortly.

My officials are considering whether further focus on construction-specific aspects might be appropriate in conjunction with industry contacts. A secondee with specialist expertise in insurance risk management has been appointed for a six month period to help with this work.

To ask the Secretary of State for Trade and Industry what assessment she has made of the number of businesses in the construction industry which are operating without employers' liability insurance cover. [113224]

Responsibility for the enforcement of Employers Liability (Compulsary Insurance) (ELCI) lies with the Health and Safety Executive (HSE). I understand that non-compliance is monitored by means of checks undertaken by HSE's Workplace Contact Officers and Health and Safety Inspectors.Prosecutions for all employers, not just construction, under ELCI is low at less than 1 per cent. HSE's estimate for non-compliance is based on the level of Enforcement Notices to Produce served for evidence of ELCI certificates. During the period 1 April 2002 to 31 March 2003 there were two Notices to Produce served on construction companies and two prosecutions.