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Construction: roles and responsibilities of insurers

​The Inspectorate has received a number of queries regarding the roles and responsibilities of Insurers and their representatives (eg surveyors and loss adjustors) when managing building reinstatement work after an insurance claim from a policyholder.

Under the Construction (Jersey) Regulations 2016, the Insurer may be deemed to be “the Client” and as such must discharge the duties that the role attracts, set out in Part 2 of the Regulations. Whilst some insurers appreciate this and have in place a good system of managing their responsibilities, others have incorrectly assumed that the ‘client’ responsibility automatically rests with either the policyholder or their appointed contractor who may project manage reinstatement work on behalf of the Insurer.

Where work is funded by the insurer

Where the insurer effectively funds the work (and therefore can exercise some form of control over it) or arranges for construction work to be carried out under the terms of an insurance policy, the insurer is the Client.

Furthermore, if the insurer specifies designers or contractors for certain aspects of the work, then the insurer is responsible for establishing that they are competent.

Cash settlements by the insurer

When an insurer agrees a cash settlement with the insured, the insured would arrange the works and as such would become the Client and rightly attract the associated legal duties.

This is also true where the policyholder arranges the work and the insurer simply reimburses them. In such cases, it is important to recognise that the Regulations make an important distinction between ‘domestic’ and ‘commercial’ clients. This must be taken into account when determining who will discharge the client’s roles and responsibilities under such circumstances.

Specific guidance on the roles and responsibilties of domestic clients under the construction regulations is available.

Planning ahead

In order to ensure that Insurers adequately discharge their duties, they should draw up a robust system to manage the process. Careful consideration needs to be given to appointments such as designers, contractors, Health and Safety Project Coordinators (HSPC’s) and Principal Contractors.

It may be that parties come to an agreement and formally declare who is best placed to arrange the work and influence most control over it (and therefore take on the role of the Client). If it is to be the Insurer’s “agent” the Insurer needs to be very careful what influence it chooses to exercise as the responsibilities of the Client may well revert back to the Insurer.

In reality these processes, usually straightforward on a new build or a traditional refurbishment project, can become complex in insurance work. Whilst some insurers and/or their representatives may be familiar with the application of the Construction (Jersey) Regulations 2016, others may not, leading to the requirements of the Regulations not being properly addressed.

In the event of an incident

In the event of a serious incident during a reinstatement project, if an insurer is identified as the Client, they will inevitably be drawn into any investigation in order to identify their level of control and decisions they have made such as competence of contractors etc.

Insurance companies should therefore ensure that:

  • health and safety is planned, integrated and managed throughout the entire process
  • the correct decisions are made in terms of appointments and competence
  • they apply additional parts of the Regulations where a project becomes notifiable
  • the insurer is discharging any legal duties 
  • ultimately that the risk of injury to those carrying out construction work on its behalf is minimised

Insurers should visit the web page Management in Construction (Jersey) Regulations 2016 for further information.

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