Paul Lucas 00:00:06
Hello everyone and welcome to a special edition of Insurance Business TV where we look at the construction insurance market. Of course, the market has faced a variety of issues since COVID, from supply chain to labor shortages to workplace restrictions. But what does the market currently look like? Find out what current trends need to be considered in this issue from Jeff Benson, Builders Risk and Contractors Equipment Program Manager at Victor Insurance Managers. Jeff, welcome to Insurance Business TV.
Jeff Benson 00:00:37
Thank you for having me. I’m excited to discuss current issues impacting builder risk and contractor equipment.
Paul Lucas 00:00:44
Well, let’s take a closer look at these, then Jeff, what industry trends do you think brokers and agents need to pay attention to in the coming year and beyond?
Jeff Benson 00:00:54
Yes. So this has been going on for several years. But I would say the biggest impact on the construction market is the long time it takes to complete projects and the additional costs due to supply chain disruptions caused by inflation. So these are the big events that impact construction insurance. The other thing I would also say is catastrophic weather events. And, you know, we’ve just been waiting for more traction and we need to understand how that impacts our business. And I would say, you know, I wouldn’t actually write these events for everyone to know about. But it would be the tropical storm, the Southeast, the convective wind in the Midwest, the wildfires in the West, the flooding in various parts of the country, I could go on and on. But these things are becoming more and more common. And what’s also happening is that more and more people are moving to what I call the areas affected by these things. However, this is just one population development that affects construction insurance.
Paul Lucas 00:01:54
So there are big events happening, Jeff, but tell us more about the current loss trends in the construction market.
Jeff Benson 00:02:01
Yes, from my point of view we are concerned with the construction processes of buildings that are being built. And what we see is the frequency problem that we have. This is probably just a little anecdotal, but it is due to the lack of skilled workers. So we have a few loss of control issues on site, I just have a lot of damage happening that could be prevented with some basic loss controls. Maybe cleaning up the site or deploying people, you know, safety measures at the site, things like that would reduce the frequency, and we’re seeing some frequency issues along those lines, water damage, you know, small leaks going on, it goes unnoticed for a weekend and leads to great damage. So that’s basic loss control. I see that and then with construction risk there’s always the common severity issue, we have a catastrophic event or a fire that burns down the building. So those are the trends that I think we’re seeing.
Paul Lucas 00:02:57
Okay, so you’ve painted a picture for us. But tell us a little about how your company is adapting to these trends, be they current trends or perhaps those you foresee in the future?
Jeff Benson 00:03:09
Yes, I think what you’re trying to do, Victor, is first of all, I’m a big believer in communication with the agent. That’s why I always emphasize when the agent calls me and says this analysis: We need to talk, you need to talk to your underwriter, you need to stay in close contact with them. You know, it seems like everyone does that. But it’s funny that agents say, “Well, I’m not used to talking to the underwriter who said, ‘Well, you have to do this.'” We live in a world where everything is automated and fast-paced. But for some of these larger accounts, it’s worth a lot to just pick up the phone and call the underwriter. That’s why I always emphasize this communication aspect. Once the underwriter understands the risks we can take, we can ensure the right terms apply. It’s just one of those things. It may have always been this way, but I think we need to talk about it more today.
Paul Lucas 00:03:56
Yes, speaking of talking to brokers and agents, just give us a little insight into why they should choose to work with Victor.
Jeff Benson 00:04:03
Yes, so I would say that in my opinion we are always available to the agent. That’s why I’m a firm believer that if you have a question, you’ll get an answer. If we can do that through automation, live chat and things like that, that’s great. But when you or my team have to take a call, we get praise. Often we actually got through to people quickly. And the construction risk is higher than other business areas. Timing is everything. So it could be 10am, I get a call, the agent will say I have to close at 2am, I forgot to place the deal, can you help me? So it’s literally a matter of a few hours in which we have to collect the data and make you a reasonable offer for the deal. Therefore, we operate in a very fast-moving world for builder risks and are aware that we strive to be available at all times.
Paul Lucas 00:04:55
Yes, I think having a human at the end of the line is definitely an outstanding quality. Question about today’s market: Do you have any other tips or key messages for agents and brokers trying to navigate the construction insurance market?
Jeff Benson 00:05:11
You know, this happens every day. As you know, it is common practice in our companies to take out 12-month insurance. So regardless of the size of the project, they write out a 12 month policy. The agent must explain to the contractor that this is likely to take over 12 months. So, after the 12 months, you either have to extend the policy or renew the policy. Therefore, it is much better to arrange this upfront, have an agreement with your underwriter and make sure the contractor understands it. So back to this communication part. You know, 10 months after we create a policy, we send an email saying: If you still need coverage, we’re here to help. If I can’t emphasize this enough, because we get calls at the last second, sometimes they forget that a month has now gone by with no coverage. We don’t want to see any gaps in reporting. So the most important thing is to just assume that we know these things are going to take longer. And we also know that they are becoming more expensive due to inflation. So build that upfront, have the conversation with your contractors and clear it with your underwriters. It’s critical.
Paul Lucas 00:06:11
Yes, great tips, Jeff, and thanks for your time today.
Jeff Benson 00:06:15
Thank you. Anytime you want to talk about contractors or equipment as a contractor, I’m here to help.
Paul Lucas 00:06:21
And if you want to further expand your insurance knowledge, that was my mandatory building plan, keep it here and on Insurance Business TV
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2024-06-10 04:00:00
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