Construction insurance is a fairly broad term that covers a range of protections involving the construction industry. In other words, instead of describing it merely as a type of commercial insurance, which it is, you could look at how the protection relates to the coverage provided. It is designed to protect construction projects, and its importance cannot be overstated. It is also a world that is evolving as technologies, practices, and environmental concerns change. Keeping up with emerging trends in the construction industry and knowing how that relates to insurance coverage is a must if your company is to grow in this changing landscape.
The Changing Landscape of Construction Insurance
Today’s construction sites look different from years past. In fact, green construction has been trending for some time, which is prompting a new focus on eco-friendly insurance policies. Increased focus on technology, such as the use of 3D printing, drones, and other emerging technologies has changed the way a construction project needs to be evaluated and protected through insurance.
In addition, there is an ever-growing demand for more cyber protection for projects to protect data against cyber-attacks and data breaches, which are becoming more and more prominent. You might not assume that cyber risk and construction go hand-in-hand, but according to a survey by Forrester, 75% of respondents who work in the construction field have experienced a cyber-related incident within the past 12 months. This is due in part to increased tech use in the industry. A cyber incident can not only put critical information about a company and its clients at risk, but it can also cause a delay in work, which is always costly, as the company works to restore its protection and reputation.
The Importance of Collaboration Between Insurers and Construction Companies
Increased collaboration between insurers and construction companies leads to improved risk management and reduced claims. This also helps insurers who are partnering with construction companies to better develop their insurance products and protections to meet specific industry needs. In other words, it brings the coverage from a broader scope to one that is more dialed in and personal for each company. The better an insurance company understands the scope of the construction industry and what coverages are necessary, the better they can optimize this type of coverage for each client.
The Role of Data And Analytics in Construction Insurance
Another emerging trend in the construction insurance industry is the utilization of analytics. The use of data and analytics to develop predictive models for risk assessment and pricing has become more mainstream. Predictive analytics helps insurancers and construction companies alike identify potential issues and take preemptive measures to prevent accidents and losses. Predictive modeling uses data analysis to cross-reference current information along with a business' claim history to identify possible patterns. This helps predict what claims might be issued in the future and therefore what coverage is needed in the present. It’s a great way to utilize data and analytics to provide better, more individualized coverage for a client.
The Impact of Climate Change on Construction Insurance
While you might assume that climate change would have no impact whatsoever with regard to a typical construction insurance plan, that couldn’t be further from the truth. The need for insurance policies that cover natural disasters and other weather-related events has increased immensely. This is because extreme weather is happening more frequently than it was in years past, so today’s construction companies have to be more vigilant with regard to their risk management practices related to climate change issues.
To see the scope of the way that climate change has impacted the world and how it is even now causing necessary changes in the insurance industry, consider the fact that between the years 1980 and 2021 in America, there were between seven and eight natural disasters per year. Throughout the time of this study, which was in late 2022, there were already 15 recorded for that year alone. Disasters like hurricanes, flooding, drought, and wildfires have combined to cause losses of over $1 billion throughout the last five years. The uptick in natural disasters countrywide has led to a need to increase coverage for many construction companies as well as the likelihood of facing a natural disaster throughout a construction project is sadly much higher.
Always Changing to Meet The Industry
As with every other industry, construction insurance has evolved to meet the needs of modern companies. This means an increased focus on climate change-related coverage, as well as more protection against data breaches, and technology protection of all kinds. Thankfully, the emergence of data analytics within the field has helped insurance companies know what needs to be provided coverage-wise and help construction companies know what is worth investing in with regard to protection. It can also help prevent accidents from taking place in the first place, which of course is preferable.
It’s vitally important for you as a construction professional to stay up-to-date on all the changes that are taking place within the insurance arena as well as these emerging trends. You need to do this in order to successfully mitigate your risks and ensure that you have enough protection in place. Contact us today at Winter-Dent to learn more about emerging construction insurance trends. We are happy to help you evaluate your company’s current state and determine if you would benefit from different or additional coverage.
