Insurance: show me the money!by Devina Divecha on Jan 1, 2013
With the construction boom across the GCC in the last decade, the importance of insurance has increased. However, while the construction insurance market has reached a mature stage, when it comes to facilities management, there is still some way to go.
Professional indemnity coverage, for example, is important to protect one’s business. Companies can look to apply for coverage for a variety of needs including protecting the firm’s employees and in the worst-case scenario, paying for legal claims.
Figuring out how much cover is needed can be a quagmire, with detailed discussions needed on behalf of the client and brokers.
Problematically, it seems that many insurance organisations don’t realise the specific nature and requirements of the facilities management industry, and are now slowly waking up to the opportunities of the fledgling market.
Rohit Kapoor, group chief financial officer for EFS Facilities Services, Jennifer Peltenburg, senior manager – business development for Duserve Facilities Management, Ryan Darnell, director services for Khidmah, and Ilana Meyer, head of corporate solutions for Acuma Corporate Solutions, discuss the development of insurance in the FM industry.
So, do FM companies require the use of insurance firms, and if so, why?
Ryan Darnell: Yes, and it is not just one solution, it is many different insurance products. One that people usually forget is professional indemnity insurance. Another that I see missed out a lot is property insurance.
Even a lot of the tenants that we deal with don’t have their own insurance. So especially when you’re talking about a large tower, something that happens three floors above can impact the floor below — people don’t take that into consideration.
Ilana Meyer: But that’s not always the responsibility of the facilities management company though. It’s the contractor or the landlord, right?
RD: No it’s not. But a lot of the time, we’re relied on to communicate and push that through to the Owners’ Association manager or property manager.
Rohit Kapoor: But it all depends on the contract you have with your customers. Your customers always want you to get the insurance done for everything, whether it’s public liability or workman’s compensation and even for professional indemnity, because there are cases where you are providing both facilities management as well as technical know-how.
IM: Yes I think that’s something that’s overlooked a lot by less professional facilities management companies.
RK: And countries like Egypt, Kuwait and Saudi, they are very nascent in professional indemnity insurance. They have to cover from places like Dubai and Abu Dhabi, because they don’t have the facility or capability to provide it. And the way you have to judge professional indemnity is also very important. Some people or insurance companies don’t know how to do that.
Jennifer Peltenburg: I think what Ryan is also trying to say is that there’s an assumption in this market that an FM company is going to have all those types of insurance including within the tenant’s building, so it’s a matter of educating people in terms of what are the types of insurances you need to be responsible for.
IM: I’ve had conversations with different insurance companies and service providers. One half of the companies were very insistent that the first thing they raised was professional indemnity cover because it had always been something neglected in the past.
And I had another conversation this morning and the gentleman said ‘why would FM companies need professional indemnity cover?’ And this coming from an insurance company that should be providing this service.
So even in the insurance industry, there is no clear way of approaching it. The question should also be: do you need an insurance company or do you need a broker that can act on your behalf and place all the different levels of coverage you require at different companies because you won’t necessarily get everything you need in one place.
Article continues on next page ...
- Khidmah calls for facilities management 'roadmap'
- FMME's Power 50 List: 1 - 10
- FMME's Power 50 List: 31 - 40
- FMME's Power 50 List: 21 - 30
- FMME's Power 50 List: 11 - 20
- FMME's Power 50 List: 41 - 50
- Success Story: Inaya Facilities Management
- Making an impression
- The DCIM advantage
- How integrated is your service?