2023 PROPERTY AND CASUALTY MARKET OUTLOOK
Submission by Rich Boisch, CRISP Advisors LI profile here
CONSTRUCTION Competition is returning to the marketplace. Insurers are willing to compete for accounts that meet their underwriting appetites.
FACTORS INFLUENCING THE MARKET Contractors will need to show resilience and creativity in managing uncertainty. Construction projects are increasingly complex, and the expected time frames to complete them are shortening. Building materials costs, inflation, skilled labor shortages, a weak supply chain, and the difficulty of forecasting budgets and timing are risks for insurers. Clients with strong risk mitigation strategies will secure the best terms from insurers. Not all clients will experience improving conditions. While pricing and availability will likely improve for the sector, contractors with challenging risk profiles due to poor losses, high-hazard operations or weak risk control programs will continue to face unfavorable market conditions. Training and job site safety will be top priorities. As contractors struggle with a shortage of skilled workers, insurers will look closely at the policies and procedures contractors have in place to help reduce the risk of injury and project delays. Increasing use of technology can reduce risk. Technologies such as smart hard hats that monitor worker condition and drones that can perform dangerous tasks remotely will improve worker safety. Building Information Modeling
(BIM) can help diminish risk and boost transparency by allowing all stakeholders to see how project parts will fit together, from building materials to HVAC systems to landscaping. BIM can reduce costly revisions and delays by detecting problems and solutions digitally before projects begin. Cyber risk is a factor. Contractors rely on multiple digital systems, software and communications devices spread across numerous job sites and offices. Many people have access, from employees working remotely to vendors and subcontractors. This increases vulnerability to cyberattacks. Firms often rely on consumer-grade antivirus protection and lack the IT security needed to protect their data. Water intrusion claims are a growing area of concern. Water damage is a leading cause of losses on construction sites. Water intrusion can lead to project delays, mold, construction defects and damaged- materials claims. Builder’s Risk coverage may not always be adequate. Between the high cost of building materials, general inflation and project delays, the cost to rebuild may be considerably higher than when the original guaranteed maximum price (GMP) was established.
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