Insurance Capabilities of Building Firm
CHAPTER ONE
Objectives Of Study
The objectives of the study are;
1. Identify the various construction risk faced by construction industry
2. Examine the response of construction industry towards the use of Contractors All Risk policy (CAR)
3. Assess the benefits Construction industry derives from using insurance as a risk management tool
4. Identify any problems Construction industry encounter in using insurance
5. Find out solutions to the challenges that construction industry encounter in using insurance.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Construction Insurance
Construction insurance is a primary method of managing risks in the construction industry. Construction insurance is a practice of exchanging a contingent claim for a fixed payment to protect the interests of parties involved in a construction project. In time of difficulty, insurance tends to transfer certain risks from clients, contractors, subcontractors and other parties involved in the construction project to insurers to provide contingent funding. Construction insurance plays an vital role in guaranteeing the success of projects, with insurers sharing losses resulting from natural disasters and other contingencies. Practitioners do not have a clear understanding of risk allocation and the strategy of risk management through insurance and in such cases insurance doesn’t receive the attention it deserves. Construction insurance encompasses all contracts of indemnity within the activities of the construction industry where insurance is chosen as the medium through which liabilities are shifted. It involves not only many branches of insurance but also many disciplines and professions.
RISK IN CONSTRUCTION INDUSTRY
Risk is a probability or threat of damage, injury, liability, loss or any other negative occurrence that is caused by external or internal vulnerability and that may be avoided through preemptive actions
Types Of Risk Involved In Construction Industry
Environmental risk
- Natural disaster
- Weather and seasonal implications
- Pollution by construction work
- Technical risk
Uncertainty of resource and availability of materials
- Inadequate site investigation
- Incomplete design
- Financial risk
Delay from clients
- Increment for staff benefits
- Unprecedented price in raw materials
- Fluctuations in Estimated finance than expected
- Construction risk
Disputes between labors
- Damage to persons and property
- Changing sequences in construction activity
- Non availability of resources
- Change in quantities of work
- Safety of workers
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine insurance capabilities of building firm. Selected construction firms in Anambra State form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain insurance capabilities of building firm. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of insurance capabilities of building firm
Summary
This study was on insurance capabilities of building firm. Five objectives were raised which included: Identify the various construction risk faced by construction industry, examine the response of construction industry towards the use of Contractors All Risk policy (CAR), assess the benefits Construction industry derives from using insurance as a risk management tool, identify any problems Construction industry encounter in using insurance and find out solutions to the challenges that construction industry encounter in using insurance. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected construction firms in Anambra state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The study determines the various types of insurances policies available for construction industry through interaction with the insurance companies. Several Construction firms were approached and through interaction with them, various insurance policies obtained by them were analyzed. From the study came to know that the insurance policies are to selected according to the nature of the project and as specified in the construction contract. Contractor is the major responsibility for risk management. In this respect, contractors should implement maximum safety measures as a priority and should have the ability to negotiate with the insurers improved conditions of insurance, through implementing proper loss control and risk management measures.
Recommendation
The insurance companies in collaboration with the client and consultants are advised to develop a manual based on risks assessed method that involved in the service and the works to fix the extent of professional indemnity insurance coverage instead of following a simple calculation method.
Insurance companies are suggested to assign experienced Engineers to visit project sites that are familiar with the type of projects, be experienced in risk identification and analysis to avert risks and it is advisable to be involved in the risk identification, allocation and drafting of insurance policies before and during construction.
Contractors need to be innovative and have the ability to negotiate with the insurers to improve the conditions of the insurance policies, as well as, to obtain best premium reduction through implementing proper loss control and risk management measures by deploying experienced professionals in the area of risk management and insurance.
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