Brokers can forge an advantage with commercial property developers by offering faster and simpler insurance for their projects. 

Developers embarking on new projects are on the stressful incline of a potentially risky ride. Throw in unpredictable factors like a labour shortage or weather events and they’ve got themselves more than proverbial spanners in the works.

NZI is offering a new insurance product, providing surety and end-to-end cover upfront at the most uncertain time in the development cycle.

“We call it NZI Total Development and it offers property development insurance from day one to done,” said Bryan Tedford, NZI’s national portfolio manager – business continuity and asset protection. 

Designed for and targeted at commercial property developers, the package provides a material damage policy – from consenting through construction to completion – with a contract works policy running alongside.

 “The combined approach we’re taking to brokers for property developers hasn’t been done before, not by NZI nor in the New Zealand insurance industry,” Telford said.

“The real beauty of NZI Total Development is that brokers no longer need to negotiate insurance at three separate stages of a development project. Those negotiations are condensed into one upfront contract. 

“It’s simpler for the broker, the developer knows their project is protected for the entire development cycle, and neither of them has to think about the insurance again. You wouldn’t lay your foundation three times over, would you?”

How it works

With Total Development, NZI agrees to cover a property:

  • even before any work begins – during phase one (planning and design) of a development project, and under a Material Damage policy
  • when the work starts – this is phase two, and the Contract Works policy kicks in alongside the Material Damage Policy
  • when the project is complete – phase three cover, which automatically reverts to Material Damage on the entire completed structure. 

“Continuity of cover across the life of the project will make it easier for developers to secure financial backing and attract tenants when the development is finished,” says Bryan. 

Growing market

Residential, commercial and infrastructure-related building activity is forecast to continue to boom, according to the National Construction Pipeline Report 2017. 

Non-residential building activity grew 12 per cent in 2016, with the pipeline report now forecasting another 29 per cent growth to a higher level of $9.6 billion in 2019.

The industry’s importance is also reflected at a national level, with construction one of the largest sectors in the New Zealand economy. It employs more than 190,000 people, or just over 8 per cent of the workforce, and contributes almost $13 billion towards New Zealand’s GDP.

December 2017