In 2019, the construction industry enjoyed overall market growth, even despite years’ long challenges with issues like skilled labor shortages. Unfortunately, 2020 took some of those gains away as jobs ground to a halt and even evaporated, supply chains froze up, and changes in local regulations forced the stoppage of work.
The year 2021 will continue to be a period of change for construction clients, including general contractors and specialist subcontractors. You may not realize it, but you have a unique opportunity to be an ally to your clients as their workers compensation broker.
What are some ways you can support your construction clients during change? Here’s what top tier brokers are doing right now.
You already talk to clients about risk, claims, and premiums, but you benefit from expanding the conversation beyond shop talk. Construction clients outspend other industries on workers compensation premiums, which means that as a broker, you’re a big part of their business. So, you should check in more often than your loss run meetings.
Now is the right time to familiarize yourself with the construction world as it currently stands. You can do that by talking to your clients about their strengths, weaknesses, challenges, plans for the future.
To get you started, consider some of the challenges contractors across the country are facing right now:
All of these will impact your clients’ bottom lines, which have knock-on effects for their risk strategies and premiums. When you know what’s happening on the ground, you’re better prepared to support them with their insurance needs.
COVID-19 reiterated the issue of risk for all businesses: it’s a silent, invisible threat that often spirals out of control before it’s detected. It’s vital that contractors stay on top of risk management in a meaningful way, and one of your biggest roles is supporting them as they navigate change.
Now is a great time to educate yourself on the unique forms of risk contractors face. These fall into broad categories including:
Risk occurs in every aspect of the business and in many different forms. Keep in mind that unmanaged growth and taking on too much work is just as much of a risk for the business as a loss of a project or a project delay due to COVID-19.
Understanding your clients’ risks allows you to better understand their risk profile and present their case more favorably to underwriters.
With an understanding of your clients’ biggest risks, prepare to help them navigate solutions, particularly tech solutions specifically designed for high-risk construction clients. Whether it’s safety management software, wearables, or even going as far as virtual reality and augmented reality, clients can meet some of their needs by embracing technology, and the same tech can help them make informed decisions and take an analytical and holistic approach to risk management.
As the construction market morphs and changes, contractors react by increasing and decreasing their payroll to meet staffing needs. Some clients will take on new projects, and others will shed areas of the business that cost them money.
When a construction client changes their business, their coverage needs change, too.
Help your construction clients by:
Another key component in the battle for the right-sized cover revolves around subcontractors. All brokers should encourage all clients to work solely with insured subcontractors. Clients who don’t prioritize insured subs take on the risk of their subs, too. And in markets like these, it’s a risk they can’t afford.
Research from Texas recently found that unrestricted construction work is associated with a higher risk for hospitalization and community transmission of COVID-19 compared to the general public. If your client doesn’t want to foot higher premiums for sub’s hospital bills, then they need to limit their networks.
Remind clients to do more than ask for a certificate of insurance from the subcontractors. They need to verify coverage for every subcontractor on every job!
Workers compensation insurance is a stalwart of the construction industry, but as the construction market changes and insurers reconsider their positions, clients are bound to have questions.
Serving as your clients’ advice is a critical part of your offering. At a minimum, you should:
Working as an advocate may not make the construction market easier to manage, but you will know that your clients have the information they need to make strategic decisions.
The good news for contractors is that the workers compensation market is soft to stable, which makes your job as their workers comp broker easier.
Other lines of insurance pose a challenge for construction businesses. Commercial auto is a challenging market for all given the rate of commercial auto accidents and the labor shortage in general, which leads less-experienced drivers behind the wheel of commercial vehicles.
Additionally, there are geographic markets facing struggles, like California’s wildfires, that make it harder for contractors to secure insurance generally as insurers become pickier about their risk appetite.
Keep delay in start up (DSU) coverage in mind and get acquainted with it, even if you aren’t their broker. Issues here will inevitably knock into workers comp issues and client problems: delays in orders increase the potential of risk-taking as contractors work to complete projects within shorter timelines.
General contractors and subcontractors enjoyed real growth in 2019 despite the challenges they faced. They can build their business back again in 2021, but they’ll rely on their relationships to be successful. As their broker, you can help them navigate the next few months and years by ensuring they get the most value for their already-expensive workers comp coverage and providing strategic tools to reduce their risk and minimize incidents.
Are you ready to build stronger relationships? Foresight could help. Get appointed with Foresight to learn more about the value we add to the construction business by providing comprehensive risk management for all workers comp clients.