Lloyd’s Analyzes Collapsing Cranes

Lloyd’s asks: “How safe are cranes? And will the recent spate of accidents involving them increase rates for policyholders?” A major indication of a booming construction industry is the number of cranes that punctuate the skylines of cities from New York to Dublin to London to Dubai.

An article on the Lloyd’s web site (www.lloyds.com) explains the new concerns about cranes. Recent examples include: “On Friday 30 May, a large crane collapsed alongside an apartment building on Manhattan’s Upper East Side in New York, killing at least two people. Only a couple of months ago, also in Manhattan, seven people were killed and a further ten injured when a 19- story high construction crane toppled onto an apartment block. Furthermore, in June last year, a crane collapsed at a building site in Croydon, South London, trapping three people for several hours and seriously injuring another.”

Lloyd’s sates, however, that “despite such incidents, underwriters have not increased premiums.” Mike Johnson, Partner, Construction, JLT [Jardine Lloyd Thompson], noted that their “frequent use and much-publicised – if rare – accidents in the past, have yet to throw up any red flags on the insurance industry’s radar.” Generally,” he contined, “cranes are not a huge issue. Crane rates have increased a little but underwriters generally don’t ask for too much detail unless there’s a particularly heavy lift involved.”

However, from a liability standpoint, Johnson observed that “things get a bit more interesting. Some underwriters are interested to know whether the contractor has a decent maintenance regime in place. They might check for safety records and ask whether workers are sufficiently trained to deal with cranes.”

“From an employers liability perspective it would be interesting to see how many people would be using the cranes and how many people are on site. However, there are no specific things going into policies about cranes. For example, they are not separately rated within liability policies.

“Accidents do, and have, happened, and these stay in people’s minds, but there’s no overriding case for it to necessarily affect the policy or for rates in construction to soar.”

According to one Lloyd’s underwriter this latest New York accident will not affect the market. He indicated: “When you hear of these events, they are both unfortunate and tragic, but to suggest it will dramatically cause underwriters to push up rates worldwide is naive. What’s more interesting with incidents occurring in the US, particular New York, is the liability aspect. Somebody may get sued, it’s just too premature to say who and for how much.”

Source: Lloyd’s