Labourers placed at risk as construction insurance is not a legal requirement
Despite the industry’s poor safety record, there is no statutory requirement in UAE to insure construction works.
There is no legal requirement for contractors in the UAE to take out insurance to guard against site accidents — despite the industry’s poor health and safety record.
“There are common law, health and safety regulations and labour law provisions which hold a contractor liable to third parties and injury to their employees,” explains Mustafa Vazayil, the executive director at Dubai-based Gargash Insurance.
“Almost all tender documents and contract conditions require compulsory insurances of the contract works, liability
arising from this, workmen’s compensation insurance and motor insurances.
“But there is no statutory requirement in the UAE to insure construction works.”
According to Vazayil, the region’s contractors who show a lax regard for safety standards are punished by having to fork out for massive premiums.
“Insurers go by the safety reputation of a contractor (which is reflected in previous claims), and therefore a good contractor is not penalised,” he explains.
“But if there has been a poor record then this is reflected in increased premiums, higher deductibles and restrictive conditions.”
But Rajagopal Sukumar, a chartered insurer at AXA (Gulf region), disagrees.
He believes that even if a contractor’s safety reputation is called into question, it is unlikely they will be saddled with costly premiums because of the intensely competitive insurance market in the UAE.
Sukumar goes on to say: “There are around 50 insurance companies and 150 insurance brokers in the UAE market.
“The supply is far more than the demand. Hence, even if a contractor has a bad experience, they get away with a price increase by choosing another insurance carrier.
“The premium rates are very low in the UAE compared with the Western world and other GCC countries.”
Vazayil comments, “The UAE — and especially Dubai — is a highly competitive market, and for most projects rates are as keen as they can be anywhere else in the world. But it is a fact that the health and safety record in the UAE construction sector needs a lot more improvement.”
The payment of bloodmoney or ‘diya’ has been highlighted recently in Construction Week’s ‘Build Respect’ campaign.
But the role of the insurance company in paying the money (which is currently set at AED200 000 per person) is not always straightforward.
“Generally the employer [of the deceased] has to pay the diya money, unless a criminal act is alleged,” says Sukumar.
He adds: “The insurance company on the other hand reimburses the employer unless they are also called in as joint-defendants by the court.
“As with all liability claims, the insurance company may take the defence proceedings on behalf of the insured, in which case the amount is paid as long as it is within the limits of the policy.”
While the payment of ‘diya’ is the primary liability of the contractor, there have been a number of cases where an individual has been found to have been negligent and thereby liable for the injury or death of a fellow employee.
“The workmen’s compensation insurance and liability insurances should be appropriately worded to ensure that the policy considers the employee as an insured, and meets the liabilities,” says Vazayil.
“The appropriate wording in the insurance policy documents is critical in such situations.”