If you run a construction company, you may be wondering what's going on for your insurance renewal. It is actually a good question to ask several months before your renewal because the conditions are challenging. The commercial insurance market has been hardening for a while now and the construction industry is no exception.
According to the Engineering News-Record, the construction insurance market is expected to continue to tighten. This means higher premiums, and some policyholders may see double-digit increases for general liability, builders 'risk and subcontractors' standard insurance. In the current environment, you may also face stricter limits and more restrictive coverage conditions.
The challenging insurance environment is due in part to a convergence of unfavorable industry conditions, ranging from COVID consequences to labor and supply chains and evolving legislation. Let's take a closer look …
COVID's ongoing impact
By 2020, New York had the fourth largest construction sector in the country, according to the New York State Comptroller. However, the state was hit hard by COVID and 44,400 construction jobs were lost, the worst decline in more than 25 years.
Construction Dive says COVID-19 cost the construction industry in New York $ 9.8 billion, according to a report from the Building Trades Employers & # 39; Association. The recovery from the effects of the pandemic is expected to take at least five years.
The Delta variant and new surges can slow recovery. According to the US Chamber of Commerce Q3 2021 Commercial Construction Index, 60% of contractors experience project delays due to the pandemic and 38% say they have problems with workers' health and safety.
Electricity and labor supply
Entrepreneurs also face labor shortages and supply chain problems, and this affects their ability to take on and complete projects.
According to the US Chamber of Commerce Q3 2021 Commercial Construction Index, 62% of contractors say they are dealing with reduced availability of construction products. Almost all contractors have difficulty finding qualified workers and 42% have refused work, while 73% say that it has been challenging to meet the requirements of the project schedule.
A new wage law
While New York entrepreneurs are trying to bounce back from the pandemic, they will also have to meet new wage demands.
New York Governor Kathy Hochul signed New York Senate Bill S2766 in early September. According to the National Law Review, this new law continues New York's expansion of workers' rights. According to the new law, contractors take joint and several responsibility for wages that the employees of their subcontractors owe. To ensure that workers receive paid wages, general contractors will also have new authority to supervise the books for subcontractors.
New York State Senator and sponsor of the bill Jessica Ramos said: “The New York State Senate is taking steps to protect construction workers from the hundreds of millions of dollars stolen each year by unscrupulous contractors and subcontractors.
While this is good news for workers trying to get the money they owe, it means more responsibility – and therefore more risk – for general contractors.
Secure insurance coverage
According to the Q / 20 Market P / C Market Report from the Council of Insurance Agents and Brokers, insurance premiums have increased for 15 consecutive quarters. Underwriting has decreased significantly on some lines, and 70% of respondents report reduced capacity for umbrella insurance.
Conclusion: Do not assume that this year's renewal will work as usual. Start early and be prepared to work creatively with your broker to secure the best rates and terms available. This can mean that you trade in the market.
Even if your renewal is still several months out, start paving the way for success now.
- Manage risks to make your account as attractive as possible.
- Loss ashore
- Review open receivables and reserves with your broker and find ways to close as many receivables as possible.
- Review your contracts and tie fixed loose ends that can be seen as contractual liabilities.  Anticipate complications during the renewal process and work with a broker (such as BNC Insurance) who has several markets available.
- Budget for interest rate increases.
As your partner in New York Construction Insurance, the team at BNC is here to help you every step of the way. Reach out and start a conversation .