Contractor insolvency is not a new risk, but recent high-profile failures are a clear reminder that even established construction businesses are not immune from financial pressure.
Ardmore Construction Group entered administration earlier this month, following other major names such as ISG and Carillion into financial difficulty. According to BCIS, construction firms accounted for 16% of all insolvencies in England and Wales in May 2026.
When a contractor fails, the issue isn’t just whether a client’s project can continue but whether the client still has control of the insurance when the project is at its most vulnerable. That is dependent on the ownership of the insurance policy.
The answer can make a considerable difference to how exposed the employer, property owner, developer or lender may be when works are interrupted.
If employers and their lenders have taken control of the project insurances from the very start of project planning, insurance effects from the contractor can be mitigated. If this has not been considered at the outset, the options after insolvency can be more limited, more urgent and potentially more expensive.
Why insurance control matters
At the start of a project, insurance is often considered as part of the contractual process. Under a JCT Building Contract, or similar, the employer will usually select an insurance option at the start of the project. This could be:
6.7.A the contractor insures the works,
6.7.B the employer insures the works
6.7.C the employer insures contract works and existing structures.
All these routes may have a place, depending on the project. But when contractor insolvency occurs, the difference between contractor-controlled and employer-controlled insurance can become very clear.
Where insurance has been arranged by the contractor, the employer may suddenly face uncertainty and responsibility around whether the cover continues, whether replacement insurance is needed urgently, how claims will be handled and whether there are gaps between the original works and any remaining or remedial works. This creates additional pressure and worry in an already stressful situation.
Where an Owner Controlled Insurance Programme (OCIP) has been arranged by the employer from the outset, the insurance position can be more stable. The policy is not dependent on the contractor remaining solvent in the same way. The insurer can be kept informed, the policy can be reviewed and updated as the project changes, and a new contractor can be appointed without necessarily having to put a completely new insurance arrangement in place.
In a difficult situation, employer-controlled insurance can help reduce some of the additional pressure and uncertainty.
Contract works insurance is only as resilient as the party controlling it.
For commercial property owners and developers, the decision about who arranges project insurance is a key strategic risk decision.
This is where the broker conversation should move from simply arranging cover to helping clients understand who holds control if the project comes under pressure.
If the contractor controls the insurance, the employer may also be relying on that contractor’s ongoing solvency, administration and responsiveness.
If the employer controls the insurance through an OCIP, they retain control of the project insurance from the outset. They retain greater oversight and continuity, which is particularly important for projects involving existing structures, phased works, listed or heritage buildings, lender requirements or complex refurbishment programmes.
Conversations should begin before any works start. Doing so after a contractor has failed is too late.
The aim is not to predict contractor failure. It is to make sure the insurance structure does not add further uncertainty if the worst does happen.
Where an OCIP can help
An OCIP provides a project-specific solution, helping address material damage, liability and financial risks, while giving greater certainty to employers, developers and lenders.
For brokers, the value is in helping clients is as much about protecting control as it is arranging cover. When a project is running smoothly, that distinction may not feel urgent. When a contractor fails, it can become critical.
How Renovation Asset supports this conversation
Renovation Asset is our core product for UK commercial projects. It is designed for commercial property owners and developers undertaking renovation, refurbishment, extension or new build works.
It provides a project-specific OCIP solution for a range of commercial sectors, including retail, housing, education, leisure and healthcare. It can also support projects involving existing structures, listed and heritage buildings, modern methods of construction and semi or partially completed projects, including situations following contractor insolvency.
Renovation Asset applies to developments where existing structures rebuild costs are up to £50 million and contract works value is up to £150 million.
It is not designed for plant and machinery-only projects, civil engineering or infrastructure works, cladding-only projects or annual contractor insurance programmes.
A conversation worth having earlier
Contractor insolvency will continue to be a concern across the construction sector. For commercial clients planning renovation, refurbishment or development works, one of the main considerations should be whether they would still have control of the insurance if their contractor failed.
As brokers, this is a valuable conversation to have before works begin.
To discuss whether Renovation Asset could be suitable for one of your client’s projects, or to talk through a case at planning stage, please email our Head of Distribution | Commercial Mike Carolan
