A hard insurance market is driving costly renewals for construction firms, particularly in construction auto and liability rates and builder’s risk. Contractors’ best response to manage through this environment will be to find ways to offset their risks (with a construction industry insurance specialist at their side).

A hard insurance market is the upswing in a market cycle, when premiums increase and fewer insurers are willing to underwrite most types of insurance. Even as certain lines for construction are particularly affected, carriers also are becoming very selective in underwriting new and renewal business as losses grow in severity and frequency.

In order to get insurance at the best rates possible, you have to show your business is a good risk. That starts with improving your loss experience. Here are some ways to do it:

  • Speed your claims closings. The longer they stay unresolved, the more effect they have on your loss experience. Enlist a claims specialist to settle outstanding claims, review them annually and develop a strategy so that claims can be resolved quickly.
  • Focus on safety. A culture centred on safety results in fewer injuries and workers’ compensation claims and better productivity, too. Employees should know safety rules and procedures; site managers should know that safety trumps production schedules.
  • Start a return-to-work (RTW) program. Making lighter duties an option to get workers back on the job faster after an injury can reduce costs of long absences and limit medical claims – which can positively influence your loss experience. Plus, they are great for morale and retention.
  • Retain more risk...if possible. Another option is to pay a higher deductible, paying smaller and more frequent claims out of pocket. Your broker should advise if your insurer and provincial regulations allow this, and whether you’d benefit from having fewer claims on your experience rating.
  • Verify your EMR numbers. Your insurance premiums can be influenced by your Experience Modifier Rate (EMR), which is based on numbers your insurer reports, like loss and payroll data. Errors can skew your EMR, so make sure the numbers are accurate.

Also think about best practices that you use now or could use to improve your business and its risk profile, and make sure your insurer knows about it and factors them into your pricing.

Any effort that focuses on your people, for example, will pay off, not only in helping to reduce your insurance premiums, but also in increasing employee retention, given the persistent labour issues that plague the construction business as a whole. Programs that address the substance abuse and epidemic of suicides that are rampant in the industry should be encouraged. To that end, it’s worth putting an Employee Assistance Program in place and promoting it heavily as a way that employees can get the help they need. Other programs that can make a difference emphasize employee health and wellness, like nutrition programs or paid time off for doctor visits.

The hard market in insurance will pose financial challenges to many in the construction industry. But it can also be an opportunity to get your house in order so that your business can get through this period – maybe better off than before.

Contact your HUB construction services specialist to find out how you can better manage through today’s hard insurance market.