The retirement of Lumley's engineering manager, Tony Docherty, after a 20 year tenure last December presented the company with an opportunity to bring in fresh, new talent to lead its engineering portfolio.

That 'opportunity' is Andy McKay who joined the Lumley team as the new engineering centre of expertise (COE) manager in January with the challenge of revitalising the engineering book.

"We will be focusing our attention on increasing our market share of construction projects as well as consolidating Lumley's more traditional area of expertise in plant and equipment," says McKay. "Despite tough times ahead for the industry, I see potential in the engineering market and will be working to further develop the Lumley COE engineering team to better meet the needs of brokers."

McKay has taken up the role at Lumley from his previous position as manager of construction and engineering at QBE. He emigrated from Scotland in 1994, and has a strong engineering insurance background having held roles with Protecta Insurance, Vero and QBE.

Having only been onboard at Lumley for a matter of weeks, McKay has already identified areas that will be important to monitor in the construction and engineering market for the coming 12 months.

"2009 is set to be a challenging year for all aspects of the construction industry. With the current economic climate dictating building consent numbers, there will be less work available in certain areas (both geographically and in specific markets). This will more than likely result in job losses and a tightening of private investment money which is fundamental to keeping the construction wheels in motion," he says.

"In the coming months construction and engineering insurers will need to be vigilant about principals and builders having the correct financing measures in place. A lack of financial backing could cause projects to stall or fail, having significant implications for the project's insurer. As with any downturn there is also the risk that contractors will choose to under-insure and leave themselves with inadequate cover. In instances such as these the builder or principal may find themselves in breech of their building contract, resulting in messy disputes."

McKay also says there are concerns with contractors who have high debt levels for plant and equipment, with little or no income to service these debts especially in areas such as forestry and agriculture. This situation can increase the moral risk for insurers if appropriate security measures are not put into place.

And while it is apparent that the market has entered difficult times for construction and engineering insurance, McKay says one of the key ways brokers can assist their clients in avoiding the market pitfalls is to maintain regular communication and understand the changing needs of their client's individual businesses.

"To ensure your clients are in the best position possible, it's advisable that brokers make regular contact, go out to project sites to check on progress, and learn about the challenges builders face on a daily basis. Discuss alternative types of covers which may help financial situations - increasing deductibles and reducing premiums can really help your clients at the 'coal face'."