Fastest Growing Industries to Focus On

Top 7 High-Growth Industries’ Risks and Unique Exposures

Planning for the “upside” must begin now. The soft insurance market will end, and the rebound from the financial bottom will happen. But don’t try to predict when, just get out in front and plan for it.

The U.S. Bureau of Labor Statistics (BLS) lists those industries expected to experience the fastest growth between now and 2016. Because of the nature of those industries, the current financial crisis will do little to temper growth, and some may even be pushed ahead faster by the state of the economy.

Seven of the fastest growing industries are: 1) management, scientific and technical consulting services; 2) individual and family services; 3) home health care services; 4) securities, commodity contracts and other financial investments and related activities; 5) facilities support services; 6) residential care facilities; and 7) independent artists, writers and performers.

Each of those seven presents unique insurance and risk management exposures beyond just the “vanilla” property and general liability coverages.

After a brief description of each industry (taken from North American Industry Classification System – NAICS), the following paragraphs list the unusual insurance and risk management needs faced by each of the seven industries. NAICS codes are parenthetically provided for reference. This information will allow agents to plan for the upside pursuit of these growth markets.

Management, Scientific and Technical Consulting Services (5416)
Entities in need of professional advice and assistance seek the help of practitioners from this industry. The most common clients for these consultants are business or manufacturing operations, and municipal and governmental entities. Scientific and technical consultants provide more specialized expertise than management consultants. Specific knowledge, experience and/or training are required of these consultants. Growth in this industry is expected to be around 22 percent. Approximately one out of every four professional consultants is self-employed, and 75 percent of consulting firms are one- or two-person operations. Insurance coverages and risk management needs for this industry include:

• Professional liability or errors and omissions protection (differs based on consulting specialty);
• Kidnap and ransom coverage if working internationally;
• Employment practices liability insurance providing third-party protection;
• Fiduciary liability if advising on or handling money;
• Due to the number of self-employed consultants and small consulting firms, workers’ compensation requirements must be closely monitored;
• If the employee works from home, one of two specific homeowners’ policy endorsements may be required; and
• Consulting firms, especially smaller ones, will require an agent who can walk them through contractual risk transfer issues.

Individual and Family Services (6241)

As America ages, more and more people will seek and require the assistance of an individual or family non-residential service professional. However, services offered by this industry are not limited to older people; nonresidential social assistance is also available to children, those diagnosed with mental retardation or persons with disabilities. Counseling, day care, advocacy and recovery help are some of the services this industry offers. The BLS expects the number of workers employed in this field to increase between 25 percent and 30 percent — mostly in the government sector.

With municipal outsourcing on the rise, many private individual and family service operations are likely to open to meet the growing demand. Some insurance and risk management exposures agents and brokers should consider for non-governmental entities providing these services are:

• Professional liability (for counseling and other professional services);
• Employment practices liability protection to include third-party coverage;
• Fiduciary liability (if helping with finances or managing property);
• Coverage for sexual abuse and sexual harassment;
• Accident and health protection for those being cared for and any volunteers that may be hurt;
• Directors and officers coverage; and
• The insured should be fully licensed and trained as per state and/or federal guidelines.

Home Health Care Service (621610)

Individuals requiring in-home skilled nursing services will search out these entities. The range of services offered by a home health care operation includes: personal care services; homemaker and companion services; physical therapy; medical social services; medication administration; medical equipment and supplies training; counseling; 24-hour home care; occupation and vocational therapy; dietary and nutritional services; speech therapy; audiology; and high-tech care such as intravenous therapy. The number of employees in this field is expected to grow by between 23 percent and 28 percent; and about one-third of these employees work part-time, according to the BLS.

Insurance and risk management considerations include:

• Medical malpractice coverage;
• Sexual assault and harassment coverage;
• Crime and/or fiduciary coverage (depending on the services being offered);
• Workers’ compensation coverage — especially critical if the home health agency pays the health care providers as independent contractors; they may still be employees for workers’ compensation purposes. Lifting injuries may be prevalent;
• If the health care professional works for more than one patient in any given day, the travel between patients will likely be considered work-related and an exception to workers’ compensation’s “coming and going” rule. This needs to be discussed with the client; and
• Some type of licensing of the business may be required.

Securities, Commodity Contracts and Other Financial Investments and Related Activities (523)

This classification encompasses a wide array of financial services including investment banking, commodities brokers, trust officers and portfolio managers. The economic downturn is not permanent, so this will likely soon return to a growth profession. The BLS anticipates 25 percent to 30 percent growth in the number of these professionals in the next seven years. Financial advisors in this class work under relatively high stress. About one-in-three of these financial advisors are self-employed.

Some of the special insurance coverages and risk management issues to be explored include:

• Professional liability;
• Fiduciary liability and/or a dishonesty bond;
• Workers’ compensation needs must be closely analyzed. A high percentage of workers in this industry are self-employed. Depending on the legal structure and the subject statute, even one-man shops may require protection; and
• Another workers’ compensation issue is occupational stress. Because these professionals work under high stress, any stress-related injury or illness may be considered compensable.

Facilities Support Services (561210)

Many businesses contract out their maintenance and other services such as janitorial; general maintenance; trash disposal; guard and security services; mail routing; reception; laundry; and other related services. BLS anticipates a 20 percent growth in this particular area. Employees working in this industry may be unskilled or uneducated, or working it as a second job. Those providing guard and security services may require special licensure. This industry tends to provide low pay and few, if any, benefits. Special insurance considerations include:

• Fiduciary liability/dishonesty bonds;
• Professional liability (i.e. law enforcement liability for guard services);
• Bailee’s coverage;
• Because many workers are working in this industry as a second job, attention must be paid to the benefits offered under workers’ compensation in relation to the loss of wages from the primary job (if the employee is unable to work it). This extension generally only exists in states with a second injury fund; and not all of these states provide this additional protection.

Residential Care Facilities (6232, 6233, 6239)

A wide range of operations is anticipated by this particular classification. Facilities and employees working in this industry provide residential care and personal care services to facility-housed patients suffering from many physical and mental issues, including those who: live with mental retardation; require on-going medical care (any age); suffer from a mental health issue; or are elderly and desire group living but do not require continuous medical treatment (retirement home). Also included in this broad classification are employees of children’s homes, “boot camp” facilities, half-way homes and orphanages. BLS anticipates a 22 percent growth in this area.

Special insurance coverages and risk management issues include:

• Professional liability (for medical, counseling or other professional services);
• Employment practices liability insurance with third-party coverage included;
• Fiduciary liability (if helping with finances or managing property);
• Coverage for sexual abuse and sexual harassment;
• Accident and health coverage for those being cared for and volunteers; and
• Directors and officers coverage.

Independent Artists, Writers and Performers (711510)

The NAICS description of this code states that this industry is comprised of independent/freelance individuals engaged in performing in artistic productions; creating artistic and cultural works or productions; or in providing technical expertise necessary for these productions. This industry also includes athletes and other celebrities exclusively engaged in endorsing products and/or making speeches or public appearances for which they receive a fee. The BLS anticipates 10 percent and 12 percent growth in the number of individuals engaged in these activities. About 30 percent of writers and 62 percent of actors are self-employed.

A few of the unique insurance issues faced by these free spirits includes:

• Workers’ compensation coverage (a majority are self-employed and need the protection);
• Media professional liability protection;
• Inland marine coverage for an artist whose work is in a gallery or otherwise on display;
• Disability income coverage; and
• Although not a property/casualty coverage, health insurance is also a major exposure for these individuals.

Completing the Top 10

Rounding out the BLS’s top 10 growth industries are: 8) computer systems design and related services operations; 9) museums, historical sites and similar institutions; and 10) child day care service providers. Each of these creates its own unique exposure and has individual risk management needs.

Planning for the post-crisis boom? If not, let this information provide some ideas on the up and coming hot markets.

Once an agent looks beyond the usual coverages, the highlighted industries are interesting and unique. Becoming well-versed and knowledgeable in these industries can give any independent property/casualty insurance agent a head start toward growth.

Additional Industry Information

Source: U.S. Bureau of Labor Statistics

Topics Agencies Workers' Compensation Property Risk Management