26 April 2023

Build-Zone celebrates 20 years in the Structural Warranty and Latent Defects Insurance market

By Build Zone

Build-Zone is an award-winning Structural Warranty provider and an established significant force in providing Latent Defects Insurance across the UK and Ireland. They cater for 10 or 12-year Structural Warranty policies across Residential, Commercial, Social Housing, Mixed-Use, Build-to-Rent and Major Project spaces.

Build-Zone was established in 2003 as a trading style of Sennocke International Insurance Services as a specialist Structural Warranty provider. April 2023 marks the 20th anniversary of the business that was acquired by Aston Lark in 2021.

We spoke with some of the senior management team at Build-Zone to look back over a period in which the business has established a key foothold in the construction insurance market, to understand what makes it so successful and to gain insight on the key changes they have experienced, and those on the horizon.

Peter Richardson – Managing Director, Build-Zone

Peter Richardson has worked for Sennocke since 2001. An inaugural Director, Peter recently stepped into Paul Kempton’s shoes as Managing Director after he passed away in 2021. Peter is now responsible for setting the strategic objectives for Build-Zone and is hands-on across business development and customer success initiatives.

What has kept you in the structural warranty industry and, more specifically Build-Zone?

Several factors have kept me in the insurance sector. I have a genuine interest in insurance and love being part of an organisation that can constantly challenge the market, explore and react to different scenarios and provide solutions that fit. I guess you could say that at the beginning, we were able to ‘put our money where our mouth was’ and get on and do something rather than follow the market.

“It was great to be able to nurture this way of working whilst we established our leading position against our competitors. I love the thrill of growth and constantly providing solutions that we were able to shape. Naturally, other companies have come into play during our time, trying to model themselves on Build-Zone – they know us, and they know we lead by expertise and deliver the best for our customers time after time.”

Significant changes in the structural warranty market over 20 years

The most significant change has been the loss of appetite of insurers to support this sector. 20 years ago, few fully understood it. Build-Zone led the way in finding capacity. A few more insurers came on board and dipped their toes in the water but didn’t necessarily do it the way we do. I believe we’ve been around as long as we have because we do it in a certain way where we value that relationship with our insurer partners.

Build-Zone is well ahead with ‘A’ Rated capacity and leading the way – particularly now towards those larger risks. We’ve seen competitors that followed us into the market, using unrated insurance capacity or even unregulated insurance capacity. These offshore companies are not regulated in the UK, so there’s no consumer protection.

Joe Gooden – Director and Head of Broking & Business Development, Build-Zone

Joe Gooden has worked for Build-Zone for 5 ½ years and has over 23 years’ experience in the insurance sector; he is a Director of Sennocke and focuses on Major Projects.

What have been the key challenges in the structural warranty market over the last 20 years?

One of the biggest challenges we have to overcome relates to peoples’ understanding of what they are purchasing, so it comes down to how well-informed they are about the process and the product. The buying signals can be completely different depending on the customer. If you have a smaller developer, they might just be looking for a quick sale, and they may be less interested in the financial strength and rating of the insurer behind a brand.

Whereas when you get into the Major Project space that I look after, so much more due diligence goes into those deals. The net widens, and you’re dealing with lawyers, accountants, funders, JV partners, etc., who usually look into the detail of the insurer’s security and the levels of cover they’re buying to ensure its suitability.

Other challenges stem from the development of MMC and how the future of these materials and techniques filters down to warranties. MMC has some fantastic benefits: the ability to build faster and reduce the number of on-site staff, which lessens the health & safety risk and the impact on carbon footprint reduction, but unlike traditional construction methods, some technical auditors are unfamiliar with such innovations, so our in-house technical team BZSS, ensure we work with those best suited to specific projects.

Do you think Build-Zone has made a lasting impact on the structural warranty industry?

Celebrating our 20th birthday is a fantastic marker, especially in an industry where many providers don’t survive the 10 or 12 year policy periods. So that in itself is a major achievement. Our previous MD and founder, Paul, did a great job of building the business from scratch and has employed some excellent people throughout that period, many of whom are still with the business today. So in terms of the future, we’ve got a perfect base to continue building on.

Over the last 20 years, we’ve grown in terms of the types of clients we’re dealing with and the types of project sizes we can underwrite. And generally, across the market, we are viewed as one of the key market leaders in our sectors. The plan is to continue recruiting the right people, drive the business forward, and ensure everyone knows who Build-Zone are. The great thing is that the legacy is there and being built upon; we’ve still got work to do, which is a good thing as well because it keeps us on our toes and keeps it exciting.

Ash Poore, Director at Sennocke & Head of Underwriting, Build-Zone

Ash Poore has worked with Build-Zone for over 15 years, 5 of which as a Director. He leads the underwriting team.

What has kept you in the insurance industry, specifically Build-Zone?

It is a great company to be part of, and dare I say it – Insurance can actually be fun! As part of the Latent Defects Insurance market, you get to be involved in some innovative construction projects & I love the process of working with a whole variety of people, whether dealing with brokers, insurers, developers, investors, lawyers, architects and engineers – it’s always quite varied making the process exciting and engaging.

What industry changes have you seen during your time with Build-Zone?

The introduction and rollout of Modern Methods of Construction MMC have been interesting to watch. Whether it’s a modular design or off-site construction, these methods are becoming more prevalent in the market because of the associated cost savings and the fact that projects get delivered much more quickly. But for insurers and the type of insurance, they offer around structural warranties and latent defects; we must fully understand the design and how the construction methods will perform – e.g. how those buildings will remain free of defects over a 10 or 12-year period of time. So when it comes to these new innovative designs, it can be a challenge because you have to understand that the professionals involved have designed robust construction methods. This also affects whether an insurer is actually going to provide a certain amount of capacity and the rates they can offer.

What makes Build-Zone stand out from other providers?

Build-Zone is one of the most established Structural Warranty & LDI providers in the UK and has been around longer than the policy length, unlike many other providers in the current market. Build-Zone is very risk management focused, whereas other providers in the past have not been. We’ve always remained committed to independent technical audits, working with construction professionals to sign off our projects. This has meant we have a good claims experience with our insurers.

What advice would you give to structural warranty and latent defect insurance customers looking for the best product to suit their needs?

The first thing to do is to seek proper advice from insurance professionals and try to understand the risks involved with construction projects. Quite often, developers and funders might need more clarification on what their cover requirements are depending on the strategy and end use of the project as well as advice on what construction design details may cause Insurers concern. Many customers will be looking for the best price rather than seeking advice about exactly what type of cover they may need to protect themselves and ultimately protect the homeowners; therefore, it is essential to deal with experienced structural warranty providers or an experienced broker, as well as aiming to get the best rates available.

Bob Stembridge – Latent Defects & Structural Warranty Specialist

Bob Stembridge has worked for Build-Zone for ten years; his expertise within the financial markets as a Lender and then the insurance industry has helped the business grow sustainably.

What have been the most significant market developments/changes over the last 20 years for structural warranty and commercial latent defect insurance providers, and what has made Build-Zone so successful?

20 years ago, the NHBC controlled the warranty market and rightly did all it could to protect its> 85% share. The likes of Zurich and others gradually gained traction in the new homes warranty market, and once the lenders accepted other providers, the market opened up to competition. There is now more business in the market than any single provider would want to deal with these days due to capacity and risk issues.

The significant events happened longer ago than the beginning of the 21st Century. The era of change commenced with the 1985 Housing and Building Control Act, which allowed competitors to local authority’s building control service. NHBC’s entry into the market for building control was the catalyst for a new warranty provider (MMI’s Foundation 15) to assist the local authorities in retaining business. They challenged the NHBC in court and won, allowing developers to belong to more than one warranty provider.

Skipping forward, Zurich Insurance entered the market in the 1990s with a full suite of warranties and challenged the NHBC monopoly. This was the catalyst for other providers to enter the market. However, like many providers, they have closed their doors to new business.

“In 2003, Self-Build Zone scoped out the single house warranty market and has become the award-winning long-lasting provider”.

In your experience, what has been the greatest challenge facing structural warranties and latent defect insurance providers over the past two decades?

There are problems caused by the boom and bust culture of the UK economy in the construction and housebuilding industries. The peaks and troughs have seen ridiculously low pricing from some providers, which has kept rates below at times to the detriment of all. For the first time, we saw insurers go out of business which temporarily brought into question the validity of the providers. This was short-lived as the quality providers could suddenly provide cover for the owners without cover.

This is a distressed purchase paid for by the Developer to benefit the homeowner. In good times the warranty is seen as just another piece of paper to be obtained and hoops to jump through to get a compliant sign-off. In poor economic times, the value of the warranty comes into its own for the homeowner should the Developer fail to meet its obligations due to liquidation etc. The latter results in pressure on the insurers and providers just when new premium income falls as fewer new homes are registered. Claims increase, and pressure builds on the Insurer’s ratios, at which point some have pulled from the UK market.

To answer the question directly: Build-Zone’s choice of highly rated insurers offers continuity and a trusted two-way relationship. This, in my view, is the primary reason for our continued success and stability in an otherwise turbulent market.

The growth of the Approved Inspector market has, on the whole, been beneficial and provided competition for building control work. However, as the housing and commercial build numbers have increased, the number of qualified personnel has not kept pace. This has led to a shortage of inspectors. By Partnering with several Approved Inspectors instead of employing staff directly, we can meet the peaks and troughs of demand for inspections.

The cladding issues have woken the market to the risk of not performing checks on design, quality and materials. The significant factor has been the start of a thorough and ongoing review of inspection standards.

What makes Build-Zone stand out?

It’s our profile and the way we operate. Because we have an independent view of developments by working with external surveyors. We are respected in the market by lenders and developers and backed by ‘A’ Rated insurers. Our underwriting, administration, technical and customer support teams are all based in one building. This helps nurture the team ethic and works to benefit customers and staff.

Build-Zone’s roots were in the self-build market for many years. Whereas some warranty providers concentrated on the builder-developer market trying to keep/retain market share, Build-Zone grew the business organically from the self-builder to the smaller developer market and, in recent years, provides warranties to the sizeable multi-million-pound apartment developments you see in many large towns and cities. This means we are very customer-focused and in contact with the end policyholders and contractors.

Happy 20th Birthday Build-Zone!

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