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Project insurance set to quadruple

NEWS

CONTRACTORS FACE a fourfold increase in insurance premiums in the wake of last month's terrorist attack on the World Trade Center, construction insurance experts told NCE this week.

Many have already been hit with increased premiums following the Independent Insurance collapse (NCE 5 July).

Brokers are reported to be telling contractors to 'overestimate rather than underestimate' their premiums for new projects in the next year.

Major projects are usually insured under fixed rates for their duration, but the terrorism insurance element is renegotiated annually. This is set to rise steeply along with other specialist insurance policies and professional indemnity.

A general rise on all other premiums is likely as insurers look to recoup their losses, insurance experts said.

Independent insurance broker Griffiths & Armour director Geoff Cox said: 'The industry's reduced capacity to reinsure means rates will harden throughout with increased premiums inevitable across the board.

'Obviously there will be a review from insurers of rates concerning high-rise buildings and terrorist cover in particular.'

BAA is reviewing its airport construction projects in the light of rising insurance costs and possible fall in demand.

'Some projects could possibly be deferred, ' a BAA spokesman said.

Contractors may also need to reorganise and extend their projects as they face increased security conditions on airport building projects, he added.

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