The Changing World of Guarantees

It can set the contractor apart from competitors and enable them to submit and win tenders on contracts where, say for instance an insurance backed guarantee is a requirement. Another benefit is that it provides vital protection and security to the building owner.

But there is an issue with the insurance backed guarantee sector of the marketplace. Recent changes within the financial services market, which are designed to strengthen regulated insurance businesses within the UK, have changed the climate. The FCA has imposed new rules that require companies to have increased liquidity ratios and this increase together with changes to when insurers can take their profit from the agreement has led to a tightening of the market. As a result insurance terms of longer than 10 years are becoming more difficult and increasingly uneconomical to obtain.

In the past insurance backed guarantees have been limited to 20 years, but that’s no longer the position as they have generally been reduced to 10 years. Does this matter? Well it should do as in the past the market has demanded up to 25-year guarantees and this will be more difficult to achieve. Also the changes are making life more complicated. Insurance and guarantees has always been an area that calls for clarity – checking what is really meant by the small print is not only sensible but also imperative. Is the guarantee true to its description and does it have the value and backup required?

In a lot of cases this may not be so. There is also a growing additional complication of making sure that the provider is not an offshore-based company. If a company is based outside the UK they are outside the jurisdiction of any European or UK mandates and as a consequence the UK Financial Services Compensation Scheme does not cover them.

Typically for the first 12 months after installation the liability lies with the contractor and this can be a key time for any problems to be addressed. After that time the insurance cover clicks in. So the issue is what do you do for the best when looking at guarantees?

The Solution for Manufacturer's Guarantees

The answer is to be thorough in your selection and to be sure you understand what is on offer and that your choice suits your particular requirements. There can be certain ways of simplifying the whole procedure. Single point guarantees, as can be offered by Sika, are often preferred by specifiers and building owners, as the responsibility for all the elements of the guarantee, including workmanship defects, material quality/performance issues and design input, can be placed with Sika. For a single point guarantee if there is a problem with the roof during service, the client has only to call Sika to get the matter resolved, regardless of whether the defect is material or workmanship related.

When a single point roofing guarantee, as can be offered with the backing of the Swiss-based Sika Group and its massive financial security – total assets of £2.57 billion – then the assurance and confidence provided is a major plus. There is the peace of mind that all customers are striving for.

Our Sika solution can save time and money too.

An IBG can cost up to four percent of the project cost so it can be a considerable sum and it is usually only a 10-year guarantee. There is a maximum cover on most guarantees and above a certain sum there is a chargeable initial inspection.

In the case of the Sika backed guarantee the period of cover can go up to 25 years. There are no additional inspection costs, the Sika approved installer has the cover that withstands even the most thorough inspection.

When you look at our objective it is to be able to offer roofing systems with wide coverage and a choice of guarantee periods, backed up by fantastic customer service for the life of the guarantee. We are able to offer choice and in our minds there’s no competition – it’s Sika’s offering which is the solution every time.