JLT research shows sharp rise in construction sector large claims
02 January 2018
- Large insurance claims over £1m up by 68% from last year
- Smaller personal injury claims fall 25% over four year period
The latest research into the construction industry carried out by JLT, the specialist insurance broker and risk consultant, has revealed that despite smaller personal injury claims being settled more quickly, the number of larger claims has increased significantly.
The Employers Liability Claims Benchmarking report surveyed some of the UK’s largest building and civil engineering contractors and compared their employee insurance claims figures between 2009 and 2015.
The results showed that there was a modest decrease in smaller claims when compared to a similar exercise last year – down two per cent from 2.31 to 2.26 when measured per £10m of manual wage roll. However when compared to 2012, the number of smaller claims reduced by a much more significant 25%, most likely as result of the introduction of the Jackson reforms and the Ministry of Justice portal for Employers Liability Claims in 2013.
It is likely that these changes have also had a positive impact on the length of time it takes to settle a claim, down 100 days from 924 in 2016, to 824 in 2017.
However for much larger claims it was a different story.
‘Catastrophic claims’ – claims with a total cost of over £1m – increased from four cases last year’s analysis to nine cases in 2017 - a significant increase of 68%. The average cost for these claims dropped over the year though from £2m to £1.5m.
Dave Cahill from JLT Specialty’s Construction team said: ‘It’s clear that the changes introduced to reform the civil litigation system are starting to be felt by the construction sector, and it’s encouraging to see such a significant reduction in smaller claims over the last four years. However it’s disappointing to see such a sharp rise in higher value claims, and I suspect that this figure may increase even more in 2018 as we begin to feel the impact of the changes to the Ogden discount rate introduced earlier this year.
‘My advice to building contractors for the coming year would be to ensure they have robust claims defence processes in place, optimise incident reporting and spend more time managing really significant claims. Contractors could also look to innovative solutions to further drive down claims such as the use of wearable technology which is having a positive impact on the safety of construction sites in general.’
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PR Manager, JLT Group
+44 (0)20 20 7895 7705
NOTES TO EDITORS:
• The number of claims was calculated relative to exposure – being the wage roll of the company in respect to employers’ liability. Within the analysis JLT calculated frequency as the number of claims incurred for each £10m of wage roll. This approach equalises the data to a common base level allowing comparison of participants.
About Jardine Lloyd Thompson
Jardine Lloyd Thompson is one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
JLT is quoted on the London Stock Exchange and owns offices in 40 territories with more than 10,600 employees. Supported by the JLT International Network, it offers risk management and employee benefit solutions in 135 countries.
For further information about JLT, please visit our website www.jlt.com.
About JLT Specialty
JLT Specialty Limited (JLT Specialty) is a specialist insurance broker and risk consultant, providing market leading industry knowledge and expertise in specialist fields to some of the world's largest companies.
JLT Specialty is part of the Jardine Lloyd Thompson Group of companies (JLT), one of the world’s leading providers of insurance, reinsurance and employee benefits related advice, brokerage and associated services. JLT’s client proposition is built upon its deep specialist knowledge, client advocacy, tailored advice and service excellence.
JLT Specialty’s Construction team places over £400m of construction insurance premiums annually within the London market, and is highly rated as one of the sector’s leading brokers. For more information on the work of the team click here.