Rapid Growth in Construction Means Greater Risk — and Demand for Smarter Underwriting
Construction is inherently risky. Large projects, lots of stakeholders, expensive heavy equipment, and dangerous work characterize the industry. More recent trends — like the ongoing labor shortage and the introduction of new technologies amid increased demand in a booming economy — means managing a project’s risks is more complicated than ever.
Total spending in engineering and construction in the U.S. will be up 6 percent by the end of 2018 over 2017, according to construction management consulting firm FMI. The industry as a whole hit 5 percent growth this year. At the same time, though, rising costs of materials drive up the value of property claims, and relentlessly increasing healthcare costs make workers’ compensation coverage more expensive. Managing increased demand amid tightening cost constraints creates opportunities for error.
Several carriers over the past few months have exited construction rather than deal with the complexities. AIG has exited the NY construction market as have a few other domestic carriers. Many are now evaluating their commitment to the construction market.
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