Page 36

FEATURES

SECTOR FOCUS: CONSTRUCTION

Building up The construction industry has enjoyed a period of sustained growth, but as the economy begins to slow, what’s in store for the sector for the rest of 2019?

THERE ARE few industries whose performance is as closely linked to the wider domestic economy as construction. The US economy has been on a tear in recent years, and it’s been an extremely positive period for the construction sector, too. Even as the wider economy enters what could be a period of constricted growth, causing many analysts to predict a flat forecast for 2019, the outlook

as a result, competition causes pricing to remain soft. “However,” he adds, “construction is a high-risk class of business, and as a result of loss activity, certain classes of business are softer than others. The increased number of construction projects, as a direct result of a healthy economy, has provided retail and wholesale brokers, as well as underwriters, a

“The increased number of construction projects, as a direct result of a healthy economy, has provided retail and wholesale brokers ... a considerable amount of new opportunities” Chad Hall, RT Specialty for construction remains strong. “The construction market has had considerable growth since 2012,” says Chad Hall, president of RT Specialty’s Tampa office. “That, combined with a surplus of capacity pouring into the insurance marketplace, has given contractors and owners of projects a lot of choices for insuring their projects. With a soft market comes competition, and

34

considerable amount of new opportunities to write business.” Pricing for construction insurance is mainly flat, although some of the harder classes of business are experiencing strong increases, Hall says. The residential condo construction and New York-based construction markets have continued to see losses, and prices have been adjusted as carriers have

pulled out of the space. “A lot of the business that had transitioned back to the standard market from the E&S market while markets competed for business is finding its way back to the E&S channel due to standard markets pulling back due to poor loss results,” Hall says.

Expertise is vital The strong demand for insurance in the booming construction industry has given ambitious agents and brokers ample opportunity to take advantage. But construction remains a risky business, and as competition ramps up, construction companies are increasingly looking for agents and brokers who have the expertise to address their specific risks and requirements. “The construction space represents a good opportunity for agents and brokers, but it is extremely important to get the job done right, rather than merely placing a policy,” says Kyle Domire, assistant vice president and broker at Worldwide Facilities. “Instances have occurred more times than I can count wherein an insured binds a policy that either excludes the type of work they perform or severely limits coverage – i.e., lack of additional insured forms. Don’t be afraid to ask for help when placing construction risks.” Unique exposures that change by project type and court jurisdiction create many challenges for construction clients, and Hall believes it’s these complexities that create opportunities for agents. He sees construction as a space where agents can illustrate their value proposition by taking a consultative approach. Agents should aim to develop a deep understanding of coverage design quirks and terms and conditions differences, which need to be customized on a projectby-project basis. “By becoming a student in the space, you can really set yourself apart,” Hall says. “Construction remains one of the highest-risk classes of business, and agents and brokers

www.ibamag.com

34-37_Sector focus_Construction-SUBBED.indd 34

12/04/2019 3:38:01 AM

Profile for Key Media

Insurance Business America issue 7.04  

The magazine for America’s insurance broking and advice community.

Insurance Business America issue 7.04  

The magazine for America’s insurance broking and advice community.

Profile for keymedia