The latest technology in construction risk management

Technological advances are driving innovative solutions that help construction businesses mitigate and even prevent risk - often lowering insurance premiums, and reducing the number of claims in the process.

Managing risk has always been a key issue in the construction industry and a shortage of skilled workers is exacerbating the situation. However, technology is now having a profound impact. Not just on the risk environment, but on insurance too. A combination of leading-edge tech and expertly-tailored insurance products may be the key to managing risk in the future.

Here we look at some of the innovations currently impacting the construction industry and evaluate their potential impact on insurance risk management.

Improving safety

Worker safety is a longstanding risk in the industry. Between 2017 and 2018 alone 38 fatal injuries and 58,000 non-fatal injuries were reported.[1]

The fatal injury rate, at 1.64 per 100,000 workers, remains high at around four times the all-industry rate, while non-fatal injuries run at 2.6 percent of workers, around 50 percent higher than the average across all industries. There are also 82,000 workers suffering from work-related ill health in the sector.

The good news is that the number of injuries is going down each year, and technology could help accelerate that trend.

Some of the key tech advances include:

• Drones – this increasingly affordable technology is useful for site surveys, making it easier to identify risks and meet safety standards. Drones can also combine with 3D modelling, which makes it easier to spot and visualise potential risks that may not be obvious from an aerial view
• Wearable tech and IoT - wearable devices can provide real-time information about a worker’s health and fitness (reducing health risks), alert them to the presence of environmental dangers or even warn when they are entering hot zones.
• Exoskeletons – these devices are strapped onto a worker’s body to transfer weight from repetitive tasks and heavy lifting, allowing them to use less energy and suffer fewer injuries. They can also help increase production.
• Building sensors – these sensors can be used for a wide variety of purposes, from security to health and safety. They can sense chemicals in water or air, and assess temperature, pressure and electromagnetic energy including electricity, light and radiation.
• Virtual reality and augmented reality – this technology can be used as a powerful training tool which allows construction workers to prepare for potential danger in the workplace and identify workplace hazards.

All these kinds of technologies reduce risk, injury and absence due to sickness, and can demonstrate good risk management for Employers Liability Insurers. Professional Indemnity Insurance (PII) policies include cover for professional services related claims arising from breaches of CDM regulations. This includes, on good PII policies, the defence of criminal proceedings. Some of the tech described above is designed to help prevent these kinds of breaches.

Reducing/eliminating error

Design mistakes, such as error in material calculations or an incorrect measurement, can cause severe delays to a project and cost a client significant time and money. A lack of technical input at the design phase, for instance, could result in the designer making assumptions about the type of materials required for the project, leading to major delays and potentially increased costs when the error is eventually spotted.

Design integration issues between the work of parties in a design team is a common source of error, for example, if a design is completed without a site visit or the design is not implemented correctly on site. Companies can also underestimate the potential risk challenges involved. The problem worsens when future financial estimates are based on designs and not on reality. There are a number of new technologies that are helping to eliminate these types of error:

• Drones & Laser Mapping - both drones, and developments to the traditional surveyor’s total stations, can reduce human error, and in theory mitigate risk of data gaps which may be pivotal in defending a PII claim down the line.

• BIM (building information modelling) – this technology creates and manages information digitally across the lifecycle of a construction project, a core element of MMC - Modern Methods of Construction. This provides a constant open-source supply chain of information to all parties on a design and build. Increasingly, the view of some insurers is that it can help assess risks more easily, and reduce rework due to design integration errors between members of a design team.
• Virtual reality and augmented reality - alongside improving worker safety, this technology is considered to allow for surveyors to view and record a space more holistically. This can avoid missing the effects of interacting factors that may cause losses on a building’s insurance policy, whilst protecting their professional risks under their PII. For a design and build team it can improve visualisation in the implementing of designs on site, which again should reduce rework costs.

Industry opinion of BIM

There has been a significant shift as companies’ race to capitalise on technological developments. However the construction sector as a whole, particularly smaller companies, have been slow to adopt digital engineering and/or BIM.

This is partly because larger companies have access to the capital needed to support considerable investment and training for BIM implementation. Moreover, the technology appears to be more useful for complex construction projects carried out by larger organisations.

These trends have been supported by the NBS annual survey which examines the perceptions and trends associated with BIM use[2]. The 2010 survey found that:

• Over the last 10 years, the uptake of BIM has increased from 13% to 69%
• 69% of the survey participants are currently using BIM
• The main barriers preventing organisations from adopting and using BIM include (Figure: Main barriers to using BIM. Source: NBS Report, 2019, p12):
  • The lack of client demand (65%)
  • Lack of in-house expertise (63%)
  • Lack of training (59%)
  • Cost (51%)
  • No time to get up to speed (48%)

The magazine Risk Management recently published details of a report into technology in the construction sector by Dodge Data & Analytics and Triax Technologies, entitled: ‘Using Technology to Improve Risk Management in Construction SmartMarket Insight’. It revealed that insurers believe that IoT technology, such as sensors, could have a big impact on reducing occupational risks, adding: “Some insurance executives also pointed out that lower deductibles are possible for proven technologies, and if the technology provides the expected benefits, fewer claims over time will result in lower premiums.”[3]

BREACH OF CONFIDENTIALITY

Engineers and architects regularly handle confidential client information and data protection is increasingly being put under the spotlight.

Anything which can be done to reduce the threat of a legal claim for breach of confidentiality is valuable, so keeping information safe is vital in any modern business.

Blockchain was originally designed for cryptocurrencies, it is a time-stamped and secure digital ledger which creates a list of data which can be distributed but not copied and is stored on a global cluster of computers, rather than being ‘owned’ by an individual. It is useful for identifying a product from manufacture through to retail, for instance, and ideal for protecting information. It can also assist in the resolution of construction disputes.

A good PI policy includes cover for breach of confidentiality in certain circumstances. Blockchain technology, which uses de-centralised servers, is tamper proof and can help protect information from the threat of fraud or data breaches. However, it may not be suitable for identifiable confidential information, because it is based on a principle of transparency.

If you would like to discuss your risks, or have any questions in relation to your PI policy, contact a member of the team.