The construction industry has been one of the worst affected sectors for supply chain issues. 80% of construction companies who took part in our research had experienced an issue in the last 12 months.
Managing Supply Chain disruption in the construction industry

The research which took place in September, interviewed 1,000 businesses in the UK on their supply chain1. Unsurprisingly, Covid-19 was the leading case of disruption for most, with 30% of respondents citing this created issues with access to labour, and 29% citing the ability of goods to cross borders.

Businesses in the construction industry also had the highest expectation of supply chain issues continuing into 2022, with 78% of respondents sharing this view.

A smooth running supply chain is critical to business operations, if an organisation can’t maintain the supply of raw materials or component parts the affect goes beyond the temporary disruption and financial loss. They could also experience significant and long-term impacts on revenues, profit, market position and reputation.

Insurance products can help mitigate the risk or control the impact of it;

Managing the risk

Whilst traditional insurance products can cover some risks, proactive risk management is a vital tool to identifying problems before they occur and can help alleviate cost pressures on insurance policies.

The construction industry has specific risks in their supply chain. Most recently this includes the ever increasing cost and availability of raw materials, especially timber and cement. Much of supply of raw material in the construction industry operates on a ‘just in time’ model, meaning even the smallest issues can have a big impact on the overall project schedule.

Risk management specialists within brokers and insurers can analyse your business operations and contracts against the cover you have in place.

Best practice for any size business is to have solid business continuity plans in place and to review these regularly in-line with changes in your sector. Again, brokers and insurers are well versed in business continuity planning and can provide a more comprehensive approach to identifying threats and weaknesses than doing it yourself.

Insuring against supply chain disruption

Insurance can help businesses protect against bad debt and non-delivery from their supply chain. Products such as trade credit insurance are no longer seen as an option only for the largest businesses. Cover is now more accessible and affordable for all. It can be used strategically for a business or tactically on a specific project, supplier or client.

As we head into 2022 and what appears to be another challenging year for the construction sector supply chain, your local Gallagher specialist can help equip your business with the right solutions to protect your business and overcome the challenges that may be ahead.

  1. Data taken from research conducted by Opinium on behalf of Gallagher, between 9-16 September 2021, among 1,000 senior decision-makers in UK businesses.

This note is not intended to give legal or financial advice, and, accordingly, it should not be relied upon for such. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. In preparing this note we have relied on information sourced from third parties and we make no claims as to the completeness or accuracy of the information contained herein. It reflects our understanding as at 24.11.2021, but you will recognise that matters concerning COVID-19 are fast changing across the world. You should not act upon information in this bulletin nor determine not to act, without first seeking specific legal and/or specialist advice. Our advice to our clients is as an insurance broker and is provided subject to specific terms and conditions, the terms of which take precedence over any representations in this document. No third party to whom this is passed can rely on it. We and our officers, employees or agents shall not be responsible for any loss whatsoever arising from the recipient’s reliance upon any information we provide herein and exclude liability for the content to fullest extent permitted by law. Should you require advice about your specific insurance arrangements or specific claim circumstances, please get in touch with your usual contact at Gallagher.