The use of insurance as a major tool in risk management in the Ghanaian construction industry

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Construction works are hazardous by nature and accidents are frequent and often severe. The annual toll of deaths, bodily injuries and property damage in construction world is very high. Not only this but construction works involve large amount of investment especially in public projects. All of this increases the risk of construction business and makes handling of financial matters more critical. Insurance and Surety are some of the methods utilized by the contractors and client as risk controlling mechanisms. There is a growing body of interests in construction insurance, supporting interactions between the construction industry and the insurance industry. The main aim of the research was to conduct an investigation into how insurance is used as a risk transfer tool in the Ghanaian construction industry. The existing literature on construction insurance was reviewed in the light of this analysis to identify key gaps in knowledge and help to focus further the research priorities. The research methodology comprised a questionnaire survey supplemented with interviews among Clients, Consultants, Insurance Companies and Contractors (mainly D1 and D2). To provide a convincing explanation on this interaction, one need to improve the theoretical and analytic frameworks in four key areas: the nature of construction risks, risk transfer and insurance mechanism, insurable risks, and perspectives on risks from concerned parties.The research revealed that Insurance companies only provide insurance covers to projects but do not normally visit project site or educate other participants especially contractors as to the control or minimizing the occurrence of risk. It was recommended that right from the briefing stage till handover to users, the client should involve the various contract groups in discussing risk management process as well as drafting of insurance policies before and during construction.
A thesis submitted to the Board of Postgraduate Studies, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of the Degree of Master of Science in Construction Management