What BIM means for insurers

Zurich together with Building magazine has looked into how insurers see BIM technology impacting on their industry.

Few subjects in construction have attracted such widespread interest and discussion as the implementation of BIM technology.


Still in its infancy, BIM should lead to greater project efficiency and reliability in terms of delivery. After all, if all parties concerned are working on a single, universally available model, then the risk of one company scuppering things for everyone else should reduce dramatically. And if something does go wrong, BIM should make it far easier to identify who is at fault and prevent too much bickering.


All this should have an impact on insurance premiums for main contractors. However, BIM is still a relatively new phenomenon – at least when considered from an industry-wide perspective – and insurance companies need some degree of certainty about new methodologies before they are able to reassess projects’ risk profiles.


Industry views

With this in mind, Building Magazine – together with Zurich Insurance – polled main contractors on their experience of BIM and their insurers’ attitudes to the technology to find out just how accepted it has become. The results make for interesting reading.



“I think that BIM is still evolving and the industry is still coming to terms with what BIM can do and how it will change the traditional ways in which we’ve been working,” said Roger Bayliss, executive vice president and chief financial officer of Skanska UK. “There are still a lot of projects where it isn’t being adopted and a lot of people who don’t understand BIM. So they wouldn’t be able to say anything other than ‘no change’.”


For instance, when asked how project risk would change over the next two years as a result of the implementation of BIM, a huge majority (about 75%) said that it would make no difference or that it would reduce risk only slightly. Given the theoretical benefits of BIM, that might seem a tad disappointing. However, according to some early adopters, the survey response says more about the saturation of BIM in the industry than it does about the technology’s potential.


Bayliss added: “If you look at BIM as less of a technological change and more of a behavioural change, where there is a better flow of information, then it should slightly reduce the risk profile of a project. But we’re still getting to grips with the whole subject and benefits that can be delivered.”


Perhaps unsurprisingly, therefore, a majority of respondents (52%) to the survey said that they weren’t reviewing the scope of insurance they required as a result of their greater adoption of BIM. After all, if BIM is still far from everyday practice, then why would contractors’ insurance need to change?


Changing insurance needs?

However, some firms are finding that their insurance needs are changing, particularly while clients’ specifications regarding BIM remain poorly expressed and inconsistent.


As one contractor, who preferred to remain anonymous, put it: “It’s a bit of a bespoke response at the moment depending on the project, which is resource and time heavy. The concern from a contractor’s point of view is that this will be seen by insurers as an opportunity to increase their fees.”


However, Skanska’s Bayliss reports a far more productive relationship with the contractor’s insurers regarding BIM. “Our approach is that we have a very proactive engagement with our insurance providers,” he says. “When the whole subject of BIM was developing, we proactively engaged with them to ensure that they were comfortable with the way in which we were approaching it. The conclusion we came to was that we didn’t need to change the scope of insurance cover.”


Insurers’ attitudes

The fact that the adoption of BIM is still at an early stage also means that insurers en masse are yet to change their working arrangements around the new technology. Asked about insurers’ reactions to offering professional indemnity insurance on projects where BIM has been adopted, a majority (87%) said that it hadn’t made any difference. More worryingly, 8% said that insurers were very reluctant to offer cover on projects where BIM has been adopted, compared with just 5% that said insurers preferred offering cover on BIM projects.


Again, this attitude seems to come from unfamiliarity. Jon Land, broking director at Romero Insurance, says: “There hasn’t been a single insurer that has come to us and mentioned BIM in any way, shape or form. I’ve seen nothing from an insurer standpoint that they’re changing anything as a result of BIM at this stage.”



However, opinion is rather more divided when it comes to the impact BIM will have on insurance premiums. Asked how premiums will be affected by the increasing adoption of the technology, 43% expressed the view that premiums would go up regardless of the benefits, compared with 35% that said they would stay the same and just 4% saying premiums would reduce.


“The cynical side of the industry would probably say that they will stay the same,” says Alex Lubbock, BIM development manager at Carillion Construction Services. However, he adds that it is probably too early to expect premiums to come down – after all, the onus is still on construction to prove BIM’s worth.


“Insurers are commercial organisations. Premiums should come down as risk decreases. However, it would be difficult at this stage for a company to demonstrate how they’re performing better than another and to get a preferential rate.”


Bayliss added: “It’ll take some time for there to be a proactive discussion about premiums coming down because we’ll have to prove the benefits. Our view is that, as the insurance industry becomes comfortable with BIM and the rest of the construction industry has got its head around it, premiums will remain about the same.”



Original article can be viewed at: http://insider.zurich.co.uk/market-expertise/bim-connection/.