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Factors Impacting Construction Risk Management in 2019


Reposted with permission from, [December 12, 2018], all rights reserved. Copyright 2018.

Heading into 2019, USI Insurance Services’ 2019 P&C Insurance Market Outlook Report states immigration and labor force issues, offsite fabrication, green construction, technological advances and effective subcontractor prequalification are expected to impact construction firms’ ability to manage risk effectively. The construction industry had a record-breaking year in 2018, as evidenced by a 6 percent year-over-year increase in construction put in place, and the growth forecast remains strong for 2019 due to favorable outlooks for all major public and private sectors.

Here’s a deeper dive on some of the key report findings related to construction organizations.

  • The impact of trade tariffs on project costs and profits remain unclear. Many reports in the first half of the year showed price increases for materials like steel, aluminum and lumber, even though the tariffs had not been imposed yet. Curiously, following the imposition of tariffs, the price increases stabilized, and contractors are now taking a wait-and-see approach.
  • Pressure to be more efficient with building processes and cost has renewed interest in modular and prefabricated construction. Modular construction speeds up sequencing, thus reducing build time, and improves quality control and worker safety. However, it also raises several serious concerns tied to transit and supply chain exposures; how general liability insurance policies would respond to a potential claim; and how workers should be categorized in a workers’ compensation program.
  • The increased use of robotics, drones, GPS and laser-guided equipment on construction sites will continue to have a significant impact on the industry. BIM, safety applications on tablets and smartphones and wearable technology are all advancing contractor’s ability to provide faster, safer and better quality projects on time and on budget.
  • Wildfires, hurricanes, tornadoes, floods, snowstorms and other catastrophes have created record property losses in the United States in the last 12 months. With construction materials and equipment heavily exposed to these disasters, construction companies face increased property risks.
  • While capacity for construction insurance remains competitive, insurers are likely to deploy capital selectively. Construction firms that are proactive and disciplined on their risk management philosophy and approach will receive a more favorable view from insurance carriers. Having a strong safety culture and the ability to articulate an organized and developed claims trend and strategy are critical points to highlight in market submissions.

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