HOW THE BUILD AMERICA AWARDS PROGRAM LEADS TO GREATER EFFICIENCES AND BETTER SOLUTIONS
Construction Risk Partners is a fully independent insurance brokerage firm dedicated to the construction industry. While the company was founded in 2006, several of its founding partners have been working together for over 30 years. Through its global network of specialized business partners, Construction Risk Partners represents many of the country’s largest and most reputable construction companies.
The company’s involvement with AGC of America goes back several decades. 2021 will mark its fourth year sponsoring the Build America Awards program which honors AGC members who build the nation’s most impressive construction projects ranging across the building, highway and transportation, utility infrastructure, and federal and heavy divisions.
In this Q&A, Constructor and Construction Risk Partners talk about the importance of the awards program, trends in the industry, and the overall market in these unprecedented times.
Q: AGC OF AMERICA AND CONSTRUCTION RISK PARTNERS COLLABORATE ON THE BUILD AMERICA AWARDS PROGRAM. HOW HAVE YOU SEEN THIS PROGRAM IMPACT THE INDUSTRY OVERALL AND ITS IMAGE?
A: It’s an honor each year to have the opportunity to recognize our country’s most complex and innovative projects and to highlight the suc-cessful completion of structures that will be admired for generations. As the winning teams’ step onto the stage at the AGC convention to ac-cept their award, their sense of pride and accomplishment is hard to miss, and it’s a privilege to share that moment with them. As projects continue to evolve, the Build America Awards will continue to drive the construction industry to gain better efficiencies and find better solu-tions to the industry’s emerging challenges.
Q: THE AWARDS PROGRAM HONORS THE NATION’S MOST IMPRESSIVE CONSTRUCTION PROJECTS. ARE YOU SEEING ANY TRENDS EMERGE IN COMMERCIAL CONSTRUCTION BASED ON PAST WINNERS AND PREVIOUS AWARD SUBMISSIONS?
A: While previous awards have been granted to a wide variety of projects, sustainability seems to be a constant theme. Given the impact that construction projects have on the environment, the various stakeholders in our industry seem to share a sense of responsibility to adapt our design and construction methods in a manner that minimizes impact on our environmental footprint.
Q: WHAT SHIFTS ARE YOU SEEING IN THE INSURANCE MARKET AND HOW HAS THE MARKET BEEN IMPACTED BY COVID-19? WHICH PRODUCTS ARE EXPECTED TO BE IMPACTED THE MOST?
A: Unfortunately for the construction industry, the pandemic has only added further complications to an already challenging insurance market. After a decade-long stretch of favorable market conditions, we began experiencing the effects of a hardening marketplace in mid-2019. The shift in the market was initially driven by a variety of factors including catastrophic loss activity associated with wildfires and natural disasters, increased cost of litigation and “nuclear verdicts,” and the lack of investment income to offset the reduction in underwriting profit. The economic ramifications of COVID-19 and the uncertainty around how the legislators and the court system will respond to pressure to force insurers to pay for business interruption losses that may otherwise not be covered has caused a great deal of uneasiness in the marketplace. All in all, we expect the hard insurance market to continue through 2021.
While all stakeholders in the construction industry are likely to feel the effect of the hard market, contractors can expect to feel the most impact in property and builders risk insurance, umbrella and excess liability, subcontractor default insurance, and surety.
Q: BASED ON THOSE SHIFTS/TRENDS, WHAT RECOMMENDATIONS WOULD YOU PROVIDE TO CONTRACTORS TO NAVIGATE ANY CHALLENGES PRESENTED BY COVID-19?
A: The best advice we can give to our contractor clients is to be willing to think creatively. As premium rates continue to increase, reassess your risk appetite. Work with your advisor to use data and analytics to help you make educated decisions on how much risk to retain and how much to transfer to your insurers. Consider loss-sensitive options like deductible plans or alternative products such as captive insurance com-panies as a means to optimize your spend on risk and insurance. Those who remain disciplined in risk management and committed to safety will reap the long-term financial benefits.
Q: MOVING FORWARD, HOW CAN CONTRACTORS PREPARE THEMSELVES AND MITIGATE RISK BOTH IN HEALTHY ECONOMIC TIMES AND DOWNTURNS?
A: The best contractors leverage their core strengths to remain opportunistic and outperform their peers in all economic cycles. During healthy times, it’s paramount for companies to focus on continuous improvement. The business planning you conduct in good times will reap significant benefit during challenging times. Strengthen your balance sheet, your partnerships at all project stakeholder levels, and innovate ways to drive more successful project outcomes. During downturns, maintain your discipline from a liquidity and contractual risk standpoint. Be agile but stick to your company’s “gut” when it comes to strategic go/no-go project decisions. Your team, corporate culture and specialized capabilities will remain key differentiators despite the external economic pressures.
Q: IT SEEMS LIKE TECHNOLOGY IS CHANGING/IMPACTING THE CONSTRUCTION INDUSTRY SIGNIFICANTLY. WHERE ARE YOU SEEING THIS EVOLUTION?
A: We see technology impacting every aspect of the construction industry. From enterprise software to field management technology to augmented reality and robotics, we see contractors continuing to raise the bar on how efficiently their projects can be managed.
The insurance industry has really started to take notice of those contractors who utilize advancements in technology to manage their risk. Not only do many builders’ risk carriers offer discounts for those contractors who utilize electronic surveillance systems to manage the risks of water and fire, but some even facilitate the engagement as part of their product offering. We are also seeing insurers invest in various plat-forms that use artificial intelligence and other forms of technology to identify safety hazards on jobsites before an accident occurs. Lastly, fleet management technology remains a focal point of the insurance community as auto liability insurance has been an underwriting loss-leader for many years. Those contractors who invest in technology to help them track and analyze driving patterns and behavior are best positioned to minimize the rising costs of auto insurance.
Q: WHAT DO YOU SEE AS THE INDUSTRY’S GREATEST OPPORTUNITIES? CONVERSELY, WHAT STILL POSES CHALLENGES FOR CONTRACTORS?
A: One of the greatest opportunities that our country has been slower to adapt is utilizing the private sector to fund public infrastructure projects. While public-private partnerships continue to gain ground in the U.S., the growth has been slower than many hoped and predicted. Not only can P3s provide a much-needed source of capital to fund our nation’s roads, bridges, schools and government buildings, it can also transfer the risks associated with these projects away from our taxpayers.
In terms of challenges to our nation’s contractors, in the short-term our clients remain concerned about a potential recessionary economy and future sourcing of work. While many learned valuable lessons from the 2008 recession in terms of how to persevere through difficult times, our contractors know that their great asset is their people. Attracting and retaining talent is critical to the construction industry’s long-term success. In the short term, contractors are going to have to balance the desire to retain their talented people with the reality that operating lean may be a necessity.
Q: HOW IMPORTANT IS IT FOR COMMERCIAL CONTRACTORS TO STAY CONNECTED WITH FELLOW INDUSTRY PEERS THROUGH AGC MEMBERSHIP?
A: If contractors are looking for an example of how the AGC membership delivers value to their organizations, they don’t have to look very far. The leadership that AGC has demonstrated during the COVID-19 pandemic has been nothing short of extraordinary. AGC’s commitment to connecting its members, delivering real-time information and helping guide the industry through unprecedented challenges cannot be over-stated. The construction industry simply wouldn’t have operated as confidently or efficiently if not for the incredible efforts of the AGC.