A changing liability regime – back to the past?

Steve Bamforth
01 October 2014

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Integrated teams and a blame-free environment require new thinking around insurance arrangements, says Griffiths and Armour chief executive Steve Bamforth.

The early 1980’s saw the introduction and growth of new kinds of procurement mechanisms into the UK construction market, particularly design and build.  

They were often hailed as a new way of working, delivering great efficiencies, more integrated ways of working and an unflinching approach to the management of risk, - all in the name of producing better, more consistent outcomes for clients and at a “guaranteed” price. Whether any or all of these aims were achieved is the subject of much debate but let’s leave that for another day.

"The buzz words are now integrated teams, BIM, a blame-free culture etc etc. All with the aims of delivering."

What is clear is that design and construct as a procurement mechanism drastically changed the liability regime for contractors and consultants alike.  Substantially more liabilities were transferred down the supply chain – some may say “risk dumped” – in a way in which I don’t believe too many were aware.  

Until it was too late and design and build began to create legal issues that had not been seen before.  Contractors and their consultants were faced with the problems of GMP contracts not to mention the legal complexities of novation. By the time these issues were fully appreciated they had been locked into hundreds of thousands of contracts – and the impact on the professional indemnity market was inevitable.

Fast forward to the early stages of this decade and are we facing a similar situation. The buzz words are now integrated teams, BIM, a blame-free culture etc etc. All with the aims of delivering. Well yes, see above.  

Are we in danger of falling into the same trap? Integrated teams and a blame-free environment (supported by BIM) are simply incompatible with traditional insurance arrangements.  

We are faced with a choice. Do we ignore the problem and hope it goes away?  It wont, they never do.  Or do we rise to the change and work with the insurance world to design innovative insurance products which fully support this brave new world of construction? A step back to the past or a leap to the future?

Steve Bamforth is chief executive of insurance broker and risk management specialist Griffiths and Armour.