Construction vision pays off for First Link
First Link Insurance Brokers, the short-term insurance arm of the FirstRand financial services group, is achieving substantial growth in contractor's all risk programmes as the construction boom gathers momentum.
The Cape Town-based Construction Division reports more than 35% year-on-year growth in its book of business from contractors.
In 2005, First Link made the strategic decision to strengthen its construction insurance offering and acquired Roos Vosloo Brokers in Cape Town, a broker with strong credentials in this specialised field.
Des Roos, head of the Construction Division, comments: "The strategic vision means First Link is well positioned to respond to the upsurge in demand.
"Only a short while ago, South African contractors had to look beyond our borders to maintain turnover. They now face the prospect of foreign competition as outside construction companies are increasingly keen to participate in our market."
Construction activity has been spurred by increased fixed investment as government commits to infrastructure expansion to spur job creation and halve unemployment by 2014. Government investment is backed by parastatal spending and bigger capital expenditure by the private sector.
Roos says construction ahead of the 2010 Soccer World Cup is only one aspect of the upsurge. Strong activity is also seen in the power generating industry, the transport sector, industrial and commercial property and the housing market.
He adds: "This has placed a huge burden on our construction industry for unprecedented performance within strict time limits."
The challenge not only relates to the scale of the work, but the wide scope and diversity of projects.
A myriad of construction activities demand different insurance responses, says Roos.
He points out: "To the uninformed, one size fits all. But a superficial approach is fraught with risk.
"Apart from the complexities of the construction process, agreements between parties embody varying conditions, each imposing their own legal responsibilities. It is essential therefore to apply insurance techniques in response to both the construction and the contractual requirements."
Insurance professionals have a responsibility to assist players in the construction sector with appropriate products and services that meet specific needs.
Roos observes: "It is imperative that South African contractors take the lead in fulfilling local construction demands. So too must suppliers and professionals deliver to the construction industry a level of service in keeping with those demands.
"The insurance industry will be faced with similar challenges to provide the required capacity and expert product offering to meet the precise demands of a construction industry under siege.
"First Link is committed to the task and is able to meet the challenge."
