Interview with construction specialist Cedric Lichte
Whether the challenges are economic, technological, environmental or political, resilience plays a central role for companies and in economic systems. What strategies and concepts do you use to help your construction clients to protect their buildings and infrastructure as best as possible against stress factors and stresses such as disruptions or disasters?
Cedric Lichte: In recent years, our customers have faced considerable challenges when it came to realizing construction projects at all. It all started four years ago with the coronavirus pandemic, which led to lengthy interruptions on many construction sites. Then came the war in Ukraine, which suddenly made it impossible to deliver essential building materials such as steel and bitumen. More recently, the rapid rise in interest rates has hit project developers in Germany particularly hard. Some of those affected took on too much financially and slid into insolvency, which also had a massive impact on construction companies. As insurance brokers, we are unable to solve many political challenges. We focus on the risks that lurk on construction sites. Above all, with our combined construction project premium insurance, in which we insure all parties involved in the construction process, from the planner to the construction company, in a single, seamless insurance contract. With this policy, we ensure that the effort for our customers in the event of a claim on the construction site is reduced to a minimum and that claims are settled quickly.
Which complex problems were solved particularly efficiently as a result?
When a claim needs to be investigated on a construction site, no one ever wants to have caused it. On large construction sites, there are sometimes more than 200 people working on the premises. This makes it challenging to identify the actual cause of the damage. This is where our premium construction project concept comes in. With this policy, we reduce complexity and no longer have to go to great lengths to determine who is actually at fault. All of this ensures more cooperative collaboration and, to a certain extent, “peace on the construction site”. This is essential to realizing projects to the satisfaction of all parties involved in the construction.
How great is the risk of business interruptions due to construction downtime or inadequately covered losses, and how can this be specifically counteracted and prevented?
It is not uncommon for construction sites to be shut down. This can happen for a variety of reasons, be it a pandemic, a shortage of building materials or because the general contractor has just gone bankrupt. These issues are simply not insurable. To a certain extent, this is a business risk that building owners bear. But there are still a variety of loss scenarios that can be insured. If we look back over the past few years in Germany, for example, we still have the terrible images from the Ahr valley in our minds. Due to such climate events, which are increasing from year to year, we are experiencing massive flooding and heavy rainfall events that cause significant damage to construction projects and at the same time lead to construction delays. Apart from natural hazards, other events can also occur, such as fires caused by arson or a construction crane that falls over due to overload and crashes through the roof of a building. When such events occur, construction site shutdowns are inevitable. The planned completion time is delayed and the customer may suffer immense financial losses. For example, the customer may have planned to receive rental income from the building from a certain point in time. However, if the building is not completed, the agreed lease cannot begin as planned. These financial losses can be optimally covered by so-called construction business interruption insurance, which is part of our construction project premium policy.
Construction site shutdowns are not uncommon. They can occur for a variety of reasons, be it due to pandemics, a lack of building materials or because the general contractor has just slipped into insolvency. These issues are simply not insurable. This is part of the entrepreneurial risk that building owners bear. But there are still a large number of loss scenarios that can certainly be insured against.
Your large-scale and complex projects include high-rise construction projects, infrastructure buildings, but also special structures such as power plants, subway tunnels, gas pipelines, deep geothermal drilling and wind tunnels. How do you manage to operate in so many different ways?
Such technically complex construction projects require not only a high level of expertise in the construction insurance sector but also a thorough technical understanding. It is important to understand exactly what is being insured and how it works. We are glad to be able to draw on the extensive technical expertise within the Ecclesia Group. Civil engineers, mechanical engineers or architects support us on a daily basis. This expertise enables us to talk to insurers at eye level and negotiate the best possible conditions for our customers.
Your team's references include over 11,500 construction projects with a construction volume of more than 28.6 billion euros. What are the biggest challenges for you and your employees, and what Ecclesia Construction strengths do customers involved in the project benefit from?
One of our biggest challenges is that many insurers are trying to avoid the current developments in Germany and the challenging topics and events to some extent. Be it in the case of timber-hybrid construction projects, which are an important step in the right direction from an ESG perspective, or when it comes to the construction of hydrogen production plants or battery storage plants, for example. Numerous insurers are not willing to provide insurance cover for such challenging projects, which reflect the current state of technological progress. But with our know-how and expertise, we ensure that we always provide comprehensive insurance cover for such complex construction projects, which are unattractive for the insurance market.
Are there particularly challenging or well-known projects that you are working on?
We support many exciting construction projects, such as the new construction of a research campus with an investment of 700 million euros, the expansion of a university campus with one billion euros, and numerous new buildings in the healthcare sector, which often also reach investment volumes of more than one billion euros. Our portfolio of construction projects also includes gas pipelines, subway tunnels, state-of-the-art data centers, power lines and power plants.
With which network partners are you able to provide your customers with comprehensive and sustainable advice and coverage? Are there particularly innovative and successful collaborations?
We generally aim to develop and maintain technical expertise independently so that we at Ecclesia Construction can operate very autonomously. However, for construction projects with extremely complex construction contract structures, such as projects carried out as part of integrated project processing (IPA projects), we work closely with a renowned law firm that specializes, among other things, in construction and architectural law. This enables us to assess specific liability situations in even greater depth, so that we can tailor insurance cover to the construction project. This cooperation allows us to offer our customers added value – at no extra cost to them.
What challenges and risks does the international construction industry face now and in the future?
Construction companies worldwide are facing similar challenges. One new trend is the Integrated Project Delivery (IPD) model. This promotes a culture of cooperation on construction sites. This model, which has been around for some time in the US and Australia, is also gaining in importance in Germany, particularly for large-scale construction projects.
What challenges and opportunities do you see in innovative construction methods such as timber hybrid construction?
Innovative construction methods such as timber hybrid construction are now part of our everyday lives. This method of construction significantly reduces the carbon footprint, but insurers are cautious about the issue due to higher claims costs. A rethink is needed here so that such construction projects can be fully insured in the future.
What are your company goals for the next three years?
Our goal is to further expand our status as a specialist broker for large and complex construction projects and to be recognized as the market-leading insurance broker in this field in the future.
You are looking for a civil engineer to join your team. What skills should they have and what tasks can the new team member look forward to?
A civil engineer in our team will experience a wide range of activities, from conventional building construction to complex infrastructure projects and power plant construction. The main task is to evaluate construction documents and identify critical points in order to recognize and analyze potential hazards. In cooperation with the insurance experts in the team, an insurance concept tailored to the individual construction project is then developed. In this respect, the daily work is very varied.
About the person
Cedric Lichte has been working for the Ecclesia Group for twelve years. He heads Ecclesia Construction, the nationwide competence center for construction projects. Previously, he was responsible for the technical insurance department for the southern Germany region, focusing on construction and installation insurance. His main responsibilities include needs analysis and insurance concepts for major construction projects: Building construction, infrastructure construction, power plant construction and others. In addition, he advises clients who are obliged to award contracts on the design and support of public tenders for insurance cover. The Head of Ecclesia Construction and his team have been able to place a construction volume of several billion euros on the insurance market in recent years.