Mike Winstanley, CIB, Head of Engineering
What is the market sentiment on the growth of the construction sector?
Like many sectors around the world, the South African construction industry has been hit hard by Covid-19, on the back of stagnant growth over many years. It has also created an incredible amount of macro-economic uncertainty, making forecasting difficult, but the current market sentiment is construction activity will more than likely decline by at least 20% in 2020.
Do you think the move to remote working will have an impact on the commercial construction industry, in the short/long term?
Some industries would have found the transition to remote working easier than others. People, not technology or machinery, are still at the core of the construction industry, which relies heavily on in-person contact, which would have made this transition difficult. However, every industry has had to adapt, with construction being
no exception. The pandemic would have at the very
least, forced or fast-tracked thinking around how the integration of technology such as robotics, drones, and collaborative cloud-based services, can…
1. Enable the analysis of quality data by project managers, who operate within complex supply chains, without having to be on-site.
2. Improve efficiencies through the course of construction projects, characterized by strict timelines.
Is there any particular area where you see potential growth?
By its very nature, infrastructure stimulates growth, creates jobs, and provides long-lasting societal benefits, which will play a critical role on our road to recovery.There is an opportunity now, to leverage off the urgency created by this pandemic, and for government in partnership with the private sector, to boost investment and really kickstart growth in the construction sector.
Government has acknowledged the urgency to not only invest in new but also existing and deteriorating infrastructure and in February 2020, said, “they have witnessed in recent years the accelerated deterioration of some of its most important assets, required to improve the quality of life of our people such as municipal water infrastructure, wastewater treatment plants, provincial and municipal roads and failing power plants”.
From an insurance point of view what impacts has the pandemic had so far?
How much an impact the pandemic will have on insurers financially in the short term, will depend on their class and mix of business they write; policy wordings; reinsurance covers and reserves.
In the long term, insurers will be carefully monitoring the potential impact of the pandemic on growth prospects and profitability in an ever-evolving situation
Like most sectors, the pandemic would have forced insurers to think about how digital tools can be used to enable more efficient and cost-effective ways of operating to maximize output, which could very well have positive lasting benefits.
It has also presented an opportunity for insurers to show policyholder’s compassion and reliability during this crisis.
Do you have any advice for brokers specialising in this sector?
No one has been untouched by the stress, fear, and uncertainty this pandemic has created and we have all had to rely on one another in some shape or form. Over the coming months, construction companies will require sound advice from their brokers who have an intimate knowledge of their business. Whether its negotiating lower premiums, restructuring cover to get the most out of their client’s construction programs, or just lending an ear to vent frustration, brokers can add a lot of value to clients in distress. Now, more than ever, businesses will need support from brokers who have their best interests at heart.