BusinessToday Previous Editions

9 EDITORIAL BusinessToday is published every Thursday. The newspaper is a MediaToday publication and is distributed to all leading stationers, business and financial institutions and banks. MANAGING EDITOR: SAVIOUR BALZAN EDITOR: PAUL COCKS BusinessToday, MediaToday, Vjal ir-Rihan, San Gwann SGN9016, Malta Newsroom email: bt@mediatoday.com.mt Advertising: afarrugia@mediatoday.com.mt Telephone: 00356 21 382741 3.8.2023 N ew regulations requiring building con- tractors to obtain a licence are a pos- itive step forward aer decades of in- action. The new rules introduce a form of regu- lation for these operators that are a crucial cog in the building industry. The require- ments are onerous but there is one aspect in the rules that is cause for concern - the requirement to have insurance cover on a project-by-project basis. The rules make it incumbent on contrac- tors to have insurance that covers liability for third party damages and injuries sus- tained by workers for individual projects. But the insurance cover is not a prerequi- site for obtaining a contractor's licence. This means that individuals employing a licensed contractor for a job, or third par- ties living close to a construction site, have no a priori guarantee the builder has insur- ance cover. It will be up to the individual concerned to verify with the regulatory au- thorities whether the particular project is covered by insurance. This leader believes that an easier system would be to have an online database acces- sible to the public of licensed contractors and one of the prerequisites for licensing would be insurance cover. This puts work- ers' and people's minds at rest that in the case of injury or damage to third party property, obtaining monetary compensa- tion would not be an issue. To this effect, this leader agrees with the argument raised by the Malta Developers' Association that one of the prerequisites for a contractor to obtain a licence should be an all-risk insurance cover. The argument put forward by Planning Minister Stefan Zrinzo Azzopardi against the MDA proposal was that the insurance sector had argued it was not prepared for such an eventuality. In fact, the original proposal to include all-risk insurance as a prerequisite was amended when the final version of the rules was approved. This argument was repeated by the head of the insurance association Adrian Galea, who warned that if the legal notice usher- ing in the new rules had retained the origi- nal proposal, contractors would have been unable to source insurance cover. He was quoted by Times of Malta saying that such all-encompassing insurance cover does not exist in the market and insurers would rather discuss the risks for each project with the contractors and supply insurance cover accordingly. However, this does not appear to be cor- rect. There are market products available that do provide indemnity and most large construction companies and developers al- ready have such all-risk policies. Professions such as architects and ac- countants also have indemnity insurance covers, which shows that products are available on the market. The probability is that insurance compa- nies would be reluctant to provide all-risk indemnity insurance to some of the smaller players in the construction industry. This could potentially lead to market con- solidation with smaller players either fold- ing up altogether or joining forces to create critical mass that would justify the insur- ance premium. Politicians may not like the prospect of having contractors closing shop and lay- ing off workers because they are unable to meet the higher standards but market con- solidation is not a bad thing if this country wants to shift gear and aim for quality and sustainability. The MDA is right when it says there should be no place for amateurs in the sector. Con- tractors and tradespersons involved in the industry must up their game or pack up and leave. The sector is intrinsically high-risk and we should not be exacerbating that risk by allowing amateurs to be involved. The requirement for an all-risk insurance could be one way of forcing this shift. Gov- ernment should reconsider its position on insurance cover and make it a pre-requisite for a contractor to obtain a licence. To minimise the disruption, a two-year transition period could be allowed before the new insurance regime kicks in thus al- lowing the smaller contractors to build up a reputation with insurers, thus making it easier for them to obtain cover under the new regime, or else make arrangements to merge with other players. All-risk insurance must be a pre-requisite for contractor's licence

• Cover