INSURANCE AND SURETY Canadian Construction law and insurance: Challenges couple with opportunities as industry evolves Canadian Design and Construction Report staff writer What does the future hold for Canada's construction in- dustry from legal and insurance perspectives? Speakers at the Canadian Bar Association's biennial Na- tional Construction Law Conference in Toronto this past fall explored some of the challenges affecting the industry at the Building for the Future Conference. About 100 con- struction lawyers and industry representatives partici- pated. Conference chair Andrew Heal, founding partner with construction law firm Heal & Co, Andrew LLP, said the conference covered a wide Heal range of topics including the increasing global competition for local construction work, “in-house” counsel perspectives, chal- lenges arising from infrastructure deficit, insurance, bond- ing and alternative performance and payment security, continued shortages in skilled trades, and ethical and pro- fessional considerations in today’s procurement environ- ment. “Procurement challenges are a key concern,” he said. “Project delivery models are changing and though the in- tent is for everything to be open and transparent, the rules often include onerous requirements that limit bidders.” Keynote speaker Stephen Bauld, president and CEO of 26 – Winter 2015 — The Canadian Design and Construction Report Purchasing Consultants International Inc., addressed this issue, speaking about the shrinking pool of bidding con- tractors as time goes on; pre-qualification becoming very specific; and specifications that seem written towards a specific company. Bauld also said smaller contractors with no expertise to bid have also become a looming issue. Maurice Audet, senior vice-president and senior ac- count manager with AON Insurance Brokers and Risk Con- sultants, described the challenges contractors face when they believe insurance covers more than it does. “Sometimes we look at a project’s risks and only about 20 per cent is insurable. Issues like weather and labour can create significant problems for proj- ects that are not covered.” Audet says the industry only has to look to the situation in Alberta a few years ago, when every project seemed to come in late and over budget, to un- derstand the implications of skilled labour shortages. “We’re seeing project owners pushing risk too far down the chain,” he said. “The result will either be com- panies cutting corners or being hurt financially themselves in order to compete.” He says a better option from an insurance perspective may be first-party, rather than third-party risk. Transferring the risk to the property insurer up front he says offers more predictable outcomes when a loss may occur.