Contractor highlights insurance snub impact
BMD came up against a brick wall during its annual insurance renewal process last year when it came to gaining cover for its work on the rail network being delivered for Carmichael coal project and for the Abbot Point coal offloading facility.
Speaking at a public hearing in Canberra for a parliamentary inquiry into the prudential regulation of investment in Australia’s export industries, Mr Power stressed that the projects all had government approvals and conditions to proceed.
“The position taken by a number of participants in the insurance industry does to some extent threaten our sovereign capacity as a country to determine which projects we choose to deliver,” he said.
In its written submission to the inquiry BMD Constructions told of threats of violence against company owners and their families as well as being cut off by insurers regarding its work on the Adani projects in Queensland.
It had been unable – via a very large international insurance broker – to obtain public liability insurance, environmental protection insurance, director and officer insurance.
“Whilst BMD was able to obtain the above policies to cover the balance of its business, it was informed that the (Carmichael and Abbot Point) projects would be expressly excluded from the cover,” the company stated.
“This meant that BMD would be uninsured in these areas for the remaining delivery of the projects. A risk so substantial that if it materialised could easily impair the company’s ability to continue to trade.”
It was forced to investigate international captive insurance markets to source insurance coverage and to manage the risks in continuing to build resource-related projects in Australia.
BMD warned that the cost of infrastructure work in Australia would increase as contractors were forced to take on extra risk as a result of this stance.
Mr Power told the public hearing on Friday that, at a time when Australia was seeking to deliver post-COVID economic recovery through investment in infrastructure, the company’s experience highlighted a significant problem that must be addressed by government, the construction industry and insurance companies.
Further public hearings are scheduled next month.
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