How Agents Can Help Construction Clients Prepare for Post-Pandemic Growth

By Peter McMurtrie | June 21, 2021

Nearly a decade of continuous construction industry growth was halted in 2020 as the industry battled direct and collateral effects from COVID-19. According to Nationwide’s recent Agent Authority research, seven-in-10 construction business owners were negatively impacted by the pandemic, experiencing the biggest hits to their company’s total revenue, ability to bid on new projects, and workforce or employee headcount.

However, despite these impacts and many lingering challenges ahead, business owners are confident about the 2021 peak season and a near-term rebound for the industry and their business. Eighty-four percent of business owners are optimistic about the strength of the 2021 peak season and about half anticipate higher demand compared to 2020.

As post-pandemic demand surges for construction services, insurance agents can play a key role in ensuring clients have adequate preparation and protection in place to keep operations on track.

Challenges Ahead

Although business owners weathered 2020’s tests, few see an easy path forward. In fact, 58% of construction owners surveyed expect it to be even more difficult to account for the health and safety of their employees compared to 2020 and 55% expect it to be harder to access the resources needed to complete jobs. The pandemic also further strained the construction labor market and roughly half of business owners anticipate greater difficulty finding reliable subcontractors or enough workers to meet project demand.

Insurance is also top-of-mind for business owners — 85% changed at least one of their insurance policies in the past 12 months and three-quarters still worry about having the right policies in place to protect their business.

Construction owners need highly specialized agents and carriers who understand their operations and are prepared to react to the unique challenges they face. Here’s how construction-focused agents can help their clients prepare for the post-pandemic demand surge.

Recognizing New and Shifting Exposures

Many construction business owners were forced to change the way they managed their business to account for the pandemic’s impacts and the changing needs of customers. Eight-in-10 business owners report they adopted different strategies or changed their operations in the past 12 months for continuity or efficiency. More than three-quarters also expect their company’s peak season to start or end outside of its typical season.

Agents are vital in helping construction clients understand the impacts evolving operations may have on their coverage or risk management needs.

By regularly checking in with clients and asking the right questions, agents can ensure they have a full picture of client operations and any changes that may need accounted for.

For example, many contractors had work in progress when the pandemic first hit and much of that work is now wrapping up. What work are they now bidding? Is it similar to their normal operations or is it new or different?

Highlight the Importance of Planning

The pandemic emphasized a need for increased business planning among construction owners to prepare for the unexpected. More than one-in-five owners lacked plans to help their businesses account for a potential recession, navigate jobsite shutdowns and re-openings, or have enough workers to meet project demand.

Agents can reaffirm their value and build stronger, long-term relationships with clients by proving they’re a trusted business advisor, not just an insurance advisor. A few ways to do this could include:

  • Partnering with clients and carriers to create business continuity plans;
  • Building up clients’ safety and loss control efforts with information or resources on ladder alternative programs, trench safety and risk transfer; and
  • Helping clients implement a successful return to work program.

One-third of business owners are also interested in guidance from their agent on the latest trends in their industry. With more than 30% of business owners feeling underprepared to meet demand in 2021, these efforts could go a long way.

Drive Fleet Safety with Telematics

The safety of employees driving company vehicles is a top concern for 77% of business owners and more than a quarter experienced fleet vehicle accidents in the past 12 months.

At the same time, the survey revealed about six-in-10 are missing opportunities to improve fleet safety and reap operational benefits with vehicle telematics systems. Agents have a prime opportunity to engage construction clients about the benefits offered by telematics and dash cams.

Initially developed for the trucking industry, telematics systems have evolved to a point where it feels like they were built for construction.

Today’s systems allow business owners to easily monitor vehicle usage and condition, as well as track the location of powered and non-powered equipment like bulldozers, skid loaders or air compressors. Additionally, telematics can help improve the driving behaviors of employees by monitoring speed, hard braking, cornering, and harsh acceleration events to reduce the risk of an accident or injury while on the road.

Reinforce Smart Hiring Practices

For many years, the industry has faced challenges associated with a workforce shortage and high demand for skilled tradespeople, and COVID-19 has exacerbated these issues for many construction firms. Three-quarters of the business owners we surveyed are concerned about not having enough employees to meet demand, and as a result, 70% say they have, will or may relax new hire screening criteria and drug practices to account for a lack of qualified candidates.

While laxed screening may ease a company’s strain for labor, these steps may also open the business up to a multitude of costly exposures including injury liability or work quality issues. Agents should reinforce the importance of maintaining stringent hiring practices and following hiring best practices, such as developing a strong and clear job description and taking time to evaluate a prospective worker’s skills. Agents can also share resources to help construction clients find good subcontractors.

Counsel Clients About Use of Technology

With an increased reliance on virtual technologies in the past year, many construction business owners have invested more in technology to strengthen their business and meet changing needs. Ninety-two percent invested in technology within the past year to meet changing client needs and 83% did so to keep their business going.

As cyber threats become more and more prevalent with both in-office and on-site technology, agents should also be counseling construction clients about the safe and efficient use of technology in their operations and ensuring employees are properly trained to recognize and defend against cyberattacks.

About a quarter of construction owners report they experienced a cybersecurity threat in the past 12 months and that cyberattacks are a top concern for their organization.

Construction owners have a high level of trust in the guidance they receive from their insurance agents, but 87% say it’s difficult to find an agent who specializes in their industry. As construction clients get back on their feet and prepare for a busy season ahead, it’s important for agents to find opportunities to share their expertise through proactive and consultative counseling. About nine-in-10 construction owners look to build long-term relationships with their agents over time and these steps are a great way to ensure those relationships have a solid foundation.

McMurtrie is the president of Property & Casualty Commercial Lines at Nationwide, where he leads all aspects of Commercial Lines P&C, including product, underwriting, claims, service, sales and distribution.

Topics COVID-19 Agencies Construction

About Peter McMurtrie

McMurtrie is the president of Property & Casualty Commercial Lines at Nationwide, where he leads all aspects of Commercial Lines P&C, including product, underwriting, claims, service, sales and distribution.

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Insurance Journal West June 21, 2021
June 21, 2021
Insurance Journal West Magazine

Construction Market & Risks Report; Markets: Umbrellas (Personal & Commercial)