Construction on the Upswing
With the construction industry undergoing a solid rebound from the disaster brought on by the great recession of 2008-2009, it’s no surprise that the demand for P&C coverage is going along for the ride.
However, two brokers who specialize in the construction industry (both of whom were Power Broker® winners in 2014), said it’s not necessarily business as usual in this post-recession world.
Aon’s Matthew Walsh, managing director in the Chicago office, who serves the construction industry, said Aon has seen an appreciable uptick in projects nationwide, as well as outside the United States.
Segments within the construction industry that are on the upswing include federal and state government building projects, some private sector building, and a growth in public-private partnerships (P3s), which are typically funded and operated through a partnership of government and one or more private sector companies.
Walsh warned, however, that as the speed of the recovery increases, so do the challenges on a state-by-state jurisdictional basis from a liability standpoint.
“Syncing up the jurisdictions with new contracts is critical,” he said.
“As the velocity of the recovery increases, there also is an increase in the factors that come to bear on case law, both from a statutory and contractual perspective.”
Because of that, Walsh said, contractors are focusing even more on bringing a solid, quality labor force on board for projects, and that in turn increases the focus on subcontractors and their workforces.
The quality of the workforce has an impact both on liability and workers’ comp, as trained workers are less likely to be injured, more likely to be aware of safety issues, and more likely to provide high-quality work, lessening potential construction faults.
Keith Jurss, senior vice president, professional liability for Willis’ national construction practice, added that his firm is also seeing commensurate growth in construction coverage.
But this time around, Willis is being asked to look at programs within so-called “project” business, where owners and contractors join together to insure much larger efforts than prior to the recession.
“A $200 million construction project used to be really big,” he said. “Today, we are seeing billion-dollar projects on a regular basis, and the size continues to go up.”
The result is more joint venturing, which requires complex “project” coverages that consolidate many policies into a single coverage program.