Five questions with... chief executive at ECIC, Richard Forrest Smith

It’s now over a year since Markel completed the purchase of ECIC in November 2017. What’s happened since then?

In short – a lot! As you would expect, there has been a busy period of transition and integration projects.

We’ve now completely transferred all new business to Markel International Insurance Company Limited (MIICL); we have a new brand as a trading name of Markel; and ECIC sits in Markel’s UK national markets business alongside Markel UK Ltd and the fee protection and advisory businesses, Abbey Legal and Abbey Tax, which support a number of affinity groups including the Federation of Small Businesses.

Perhaps most important is that since last April we have been using a single TOBA to allow brokers to access the entire Markel UK portfolio.

What benefits should brokers expect from the acquisition – and when?

Being part of Markel International brings many benefits to the trade associations, brokers and contractors that ECIC supports with insurance covers. Not least in the way we leverage the strength of the Markel business to deliver a greater breadth of products and services.

We have a number of key product enhancements scheduled and have already added a Legal Expenses Insurance policy as an add-on to our commercial combined cover for the specialist contractor market.

Are you planning to grow your book of business significantly under your new ownership?

Yes and this has started with a new partnership with Cobra Network to enable Cobra Network members to access specialist contractor insurance cover developed for the network, providing brokers with a competitive edge.

We also remain focused on our existing brokers, and are looking at ways we can leverage Markel’s portfolio of insurance covers and non-insurance services for the benefit of our brokers and policyholders.

Markel’s UK national markets business is focused on establishing itself as a liability led, sector specialist and ECIC fits very nicely into that offering, bringing over 40 years’ underwriting and claims expertise in the contracting market.

How is the contracting market performing? What are the big opportunities for brokers right now?

Just look around at the number of construction projects in place. The market is in good shape but there are threats in terms of skills shortages and material costs especially with Brexit on the horizon. Good, relevant advice is crucial for the specialist contracting market and this plays perfectly to the broker proposition.

Brexit will almost certainly impact the contracting sector, what are the key areas of concern from your perspective?

First we have the issue of skills. As our skilled contractor workforce has aged with 500,000 expected to retire in the next ten years, the younger generation joining the sector are struggling to fill the gap. There is a real dearth in skills which has been filled to an extent by migrant workers – a valuable human resource is at risk of dissipating following Brexit.

There are concerns that scarcity of skills will push labour prices higher and increase reliance on sub-contractors. This in turn will increase main contractors’ responsibilities around site risk management and ensuring insurance arrangements are adequate to cover all those employed. It remains crucial that full risk assessment processes are followed for the entire workforce, not just those who are directly employed by the main contractor.

Considering that the Health and Safety Executive released data in 2018 showing a 27% increase in construction fatalities in the past year, maintaining health and safety standards is becoming ever more important.

The other big factor is materials costs. Almost all construction materials are imported and may be subject to tariffs following Brexit. Rising material costs may lead to reductions in supply as companies become more cautious in their ordering, and this reduced supply may in turn drive up costs further.

If contractors resort to using lower standards of materials this could have massive implications for worker safety during the construction phase and the longer term safety and integrity of the building.

It comes back to the broker proposition in this market. We understand that in the drive to cut costs, specialist contractors may be looking for cheaper insurance deals from non-specialist providers online. However, it is vital that they seek advice from their broker to ensure that they have adequate and appropriate cover.