Abstract:
There is a growing body of interests in insurance, supporting interactions between
the construction industry and insurance industry. However, it is not always clear why
construction insurance exists and how it operates from the perspective of the
construction industry.
In Sri Lankan the construction insurance focus with the contract documents such as
ICTAD SBDs, FDIC and particular specifications. This traditional approach to
insurance has been one that requires the contractor should purchase appropriate levels
of coverage for all parties to a contract such as employer, consultants, contractor and
subcontractor as called out in the contract documents through their own insurance
underwriters.
While this approach to insurance remains predominant in the construction industry in
Sri Lanka, it is recognized for its inherent inefficiencies in terms of cost,
administrative management, claims management, gaps and overlaps m coverage.
Because of the rapid and ever increasing costs of insurance, construction
professionals, owners and construction insurers have required a more effective and
efficient insurance programmes aimed at addressing existing shortcomings.
The objective of this research was to study how the contract risk can be handled
through insurance in the road construction projects to minimize the inefficiencies.
Data collected through RDA, PRADA, road construction contractors and insurance
underwriters.
The results can be used by public agencies when preparing bidding documents and
by construction contractors to better understand, which factors affect their insurance
premium and to realize that there are significant factors to be considered when obtain
insurance covers and preparing claims against damages.
Key words: Insurance, Construction industry, insurance underwriters, public
agencies, inefficiencies, CAR policy
