MDA and KTP criticise lack of insurance cover as a requirement for contractor licensing

With the new contractor licensing law having come into effect on 18th July, key industry stakeholders have expressed discontent on the removal of insurance cover as a pre-requisite for contractor licensing, as it was written in the original proposal.

The new law requires all existing contractors to apply for a licence before 1st November 2023. Applications have opened on Monday (24th) on the Building and Construction Authority’s (BCA) website. Contractors who fail to apply within the deadline will have to suspend their operations until they are granted a provisional licence.

From 1st January 2025, all contractors will have to be fully licensed.

While both the Malta Developers Association (MDA) and Chamber of Architects (KTP) welcomed the law after having advocating for licensing system for several years, they took issue with the fact that insurance cover was no longer a requirement for contractors to be licensed.

“The MDA is very disappointed and cannot understand why the obligation of contractors to be covered by an adequate insurance policy to cover third parties’ properties and damages and the contractor’s employees has not been made compulsory at licensing stage and at every renewal stage,” read the MDA’s statement.

“This has rendered the new legal notice weak and ineffective and will not achieve its desired results.”

The statement by the MDA prompted a reaction from the Ministry of Public Works. While it did not address why the pre-requisite was removed, it said that that the law requires that the licensee to ensure that any works undertaken by contractors is covered by a valid insurance policy.

While KTP recognised that the law stipulated that a licensed contractor is required to ensure works are covered by an insurance, they explained that this causes an unnecessary burden on the BCA’s enforcement personnel and on clients to verify that insurance was indeed taken out.

“It is far more practical to ensure that adequate insurance cover is a pre-requisite for the issuance of a licence,” said KTP, alluding to the fact that all periti must be covered by insurance prior to being issued a certificate to practise.

“The presentation of a licence card should be sufficient proof of coverage for clients.”

The MDA called on the Minister responsible to amend the newly introduced regulations, and also other regulations in order to improve the quality and safety standards of the construction industry. It also appealed to the Opposition in Parliament to file a motion for said changes to be made.

Meanwhile, KTP called for urgent discussions with the Government and the MDA to address the issue to explore alternatives with local underwriters, having noted, “the Malta Insurers Association’s unwillingness to provide such cover.”

It also called for a timetable to broaden the licensing regime to include building services and finishing works in the medium-term to ensure standards are raised across the industry.