Abstract:
Construction industry all over the world faces many uncertainties and risks. Firms have to manage risk on daily basis. In order to run the project smoothly and make it profitable, risk should be properly managed. Out of various prime stakeholders, contractors take the major responsibility to deal with risk during construction process. One of the methods to transfer risk is through insurance to insurance companies. This study has performed an extensive literature synthesis to investigate the local insurance practices in the construction industry and the factors effecting the estimation of insurance premium. Additionally, construction experts were surveyed to assess their confidence in transferring the risks to insurance and get their perception on the risk factors to be considered in estimating the premium to enhance the effectiveness of insurance. Second survey was conducted form the insurance companies to assess the factors based upon which premium is estimated and investigate their perception about the construction industry. The data was analyzed to check how much risk construction companies are transferring to the insurance companies. Data from both the industries was analyzed to check the level of confidence of construction companies on insurance infrastructure and its effectiveness, enforcing the use of insurance on the construction industry and the need to regulate the insurance policies to effectively serve the construction industry.
