FEATURES
SECTOR FOCUS: CONSTRUCTION
From the ground up Are brokers in a position to exploit the current opportunities available in the construction industry? IBA spoke to some experts in the sector to find out THE FORECAST for the US economy in 2017 is looking increasingly positive, and economists expect continued expansion throughout the year. With the new administration in the White House proposing an aggressive fiscal stimulus plan through tax cuts and infrastructure spending, it seems as though the ghost of the Great Recession can finally be put to rest. As more new jobs get added, payrolls increase, consumer spending is boosted, and construction activity (often a barometer for the nation’s overall economic health) continues to rise. As more new projects begin construction and even more get the green light for design, spending in the sector is soaring. For insurance brokers operating in the space, the construction boom represents a great opportunity to attract a prosperous client base. More than 730,000 construction companies across the country employ upwards of 7 million employees, making the construction industry a massive contributor the country’s economy. The annual revenue of the US construction industry totals more than $1.7 trillion, and that number is only expected to rise as President Trump pursues various strategies to spur economic growth
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and improve America’s infrastructure. But as the construction industry grows, so do the risk management needs of those operating in the space. “In terms of policy count growth, we’ve seen a nice spread of consistent growth across the whole country, but there has been significant growth in certain pockets, including the Midwest and the Northeast,” says Anthony Dietz, vice president at Arch
array of coverage and provide protection for all types of businesses and individuals, ranging from general contractors building homes or commercial buildings to artisan contractors performing a wide variety of specialist services. “There are even construction policies that project owners can buy, even though they’re not performing the work themselves,” says Kent Boatwright, construction risk team broker and underwriter at Quirk & Company. “The project owner hires a general contractor to carry out the work, but in many cases, will buy an owner’s and contractor’s protective policy, known as an OCP, that offers an extra layer of general liability for the project owner themselves.” Organizations and individuals operating in the construction space face many unique risk exposures – one key area is the contractual agreement requirements set forth at the beginning of a project. Boatwright gives the example of a general contractor hiring a plumber to carry out work on a project. In many cases, the two parties will enter into a contract that requires the plumber to carry certain coverages, limits and even
“The demand is high, but there is also increased competition. With the soft market, everybody is bleeding and wants to write as much business as they can” Kent Boatwright, Quirk & Company Insurance. “Nationally speaking, construction spending is at its highest rate in seven and a half years, post-recession. There are great margins and great growth, which is great for our contractors and for us.”
Risks aplenty Construction insurance policies offer a broad
endorsements, which may include general liability, excess liability, and even their own auto and workers’ compensation coverage. The plumber may also be asked to name the general contractor as an additional insured. “Another typical requirement is an endorsement that gives the subcontractor – the plumber, is this case – his own general
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17/03/2017 6:12:29 AM