While construction has not suffered quite the same economic impact as the hospitality, restaurant or airline industries, it is still being affected by the pandemic financially and operationally. The construction industry is expected to face further challenges due to slower building growth, supply chain disruptions and other factors. During this time, Crum & Forster (C&F) has maintained its laser-focus on its customers, sharing risk mitigation tools, developing new ones, and monitoring trends in the industry to help clients stay one step ahead.
Risk Identification & Evaluation
“We took the time to evaluate how COVID-19 was affecting our clients to help ensure the safety and security of their job sites and to reduce risk across their operations,” explains Marty Horsman, Senior Vice President of Crum & Forster’s Contractors segment, which specializes in providing guaranteed cost and loss sensitive insurance solutions for the construction industry.
Construction sites have always had limited access so they are rarely exposed to the general public. What was new during the pandemic:
- Job-planning controls
- Cleaning and sanitizing work sites, tools and motor vehicles
- Mandatory mask-wearing
- Body temperature checks
- One-way lanes
- Posted security guards
- COVID-19 testing
“On our site visits, we examined what construction firms were doing with the goal of reducing exposure to the coronavirus, as well as other potential exposures to loss,” Horsman adds. “COVID-19 exacerbated everything, but we always look at all the risks that can impact underwriting. We help our clients and our agents understand the various exposures that exist and what can be done to prevent or mitigate loss.”
Specialized Resources for the Construction Industry
Most buildings have remained open during the pandemic, and that means they must be kept running. C&F developed specific COVID-19 guidance for the elevator maintenance industry that lays out location guidelines, protocols, contractor onsite actions, PPE inventory and management, and contractor and employee responsibilities. These and other guidelines in our COVID-19 Construction Industry Response Planning Guide were well received by the industry and customers.
COVID-19 Assessment Checklists
During the pandemic, C&F staff consultants developed detailed COVID-19 assessment checklists and customer support programs. “We reached out to all of our clients, large and small, assessing COVID-19 safety programs and identifying best practices that could help them reduce risk,” noted Louise Vallee, Vice President of Risk Engineering at Crum & Forster. “Clients were overwhelmed trying to figure things out at first and felt supported by our assistance as we worked together as partners, helping them identify gaps, target risk improvement areas and developing customized compliance programs for their specific needs.”
Helping Our Clients Win New Contracts
Vallee explained that successful safety compliance also helps with potential future bids and contracts because clients have appropriate safeguards in place. “We developed additional resources during the pandemic, including “Toolbox Talks,” training materials and guides, with C&F Risk Engineering staff on-call to assist clients as needed.” As C&F works with customers to help keep employees safe and mitigate loss, construction firms are now highly engaged in the COVID-19 management process and have diligently evolved their guidelines and best practices to help their businesses run safely and effectively.
Global consulting firm Deloitte recently predicted a potential slowdown in the engineering and construction sector as supply chains get disrupted, a shortage of subcontractors and materials develops, and projects get put on hold to control expenses. This will result in the construction industry – and commercial insurance – looking very different.
“I think construction will follow the change in the business landscape resulting from the pandemic. As people move away from big-city financial centers, large projects such as shopping areas and schools will follow, and plans for inner-city megaplexes will shift or be put on hold. It will be much like in the 1950s, when people migrated away from expensive, crowded cities to the quiet suburbs,” states Marty Horsman.
“Another trend we are seeing is wearable devices on job sites not only for safety and job planning but for reinforcing social distancing, temperature monitoring and contact tracing,” said Tony Pacholec, Vice President of Underwriting for C&F’s Contractors Segment.
The Road Ahead
Horsman notes that entire teams could be relocated, and they’ll need schools, shopping, infrastructure and more. Existing offices and other buildings may need to be retrofitted with better internet connectivity, upgraded restrooms, revamped HVAC systems and better electrical grids, plumbing and sewers. “This all will require construction – just of a different nature, possibly in a different place. People focus on where the work is. We will see upgrading, enhancing, etc., but not a lot of new conference centers, hotels, dorms and the like,” said Horsman.
Nevertheless, with nonresidential construction expected to contract anywhere from 6-7%, according to recent surveys by AIA.org and others, brokers and commercial insurers need to be prepared. As fewer buildings go up, construction firms may need to insure fewer employees, vehicles and other equipment. Insurance programs will shift with lower premiums requested and flexible payment plans needed – all characterized by customized risk and underwriting models.
Meeting Our Clients’ Needs
“Throughout the pandemic, we have enhanced our service and our communication with our customers and our agents,” explains Mike Farrington, Vice President of C&F’s Contractors Segment. “We have access to resources that can be delivered electronically and provide value – and our virtual and in-person stewardship meetings enable us to listen to our customers, address their questions, and provide insurance solutions and risk engineering service plans in accordance with their feedback and customer needs.”