Market Outlook: Construction
Industry Trends
Larger contractors are benefitting from the Infrastructure Investment & Jobs Act (IIJA), which allocated $550 billion in new spending over a five-year period. Funding should increase contractor confidence to bid for big projects, as they can better plan for the future.
The IIJA also includes $100 million dedicated to construction technology, facilitating efficient and fast estimation, project cost management, scheduling, and risk management. In addition, upgrades and improvements to equipment and tools will increase efficiency and safety.
Permanent modular construction is rising, up 50% over the last five years, with low construction costs, shorter construction time frames, and reduced waste.
The industry is also seeing more interest, with construction trade program enrollment up 5%. This will help address the shortage of skilled trades workers.
Smaller, local trade contractors should see more work with expected growth in energy technology. Jobs will include the installation of wall chargers in home garages for electric cars, solar panel installations, and replacing oil furnaces with heat pumps.
Adaptive reuse of vacant and underutilized real estate is an additional source of work for contractors. Commercial real estate owners and investors are repurposing space left vacant as more leases are non-renewed due to COVID-19 and remote work continues for many office jobs. Conversions to apartments and storage facilities are on the rise in metropolitan cities.
On the GL Insurance Side
Competition in the insurance marketplace for Contractors General Liability (GL) coverage is focused on policy terms rather than pricing, according to Wendy Nowosiadly, ISC Vice President – Underwriting. “There is a need for broader, less restrictive coverage, particularly in New York with increasing pressure by GCs, developers and risk managers for less restrictive subcontractor conditions due to action over potential. This is something we are exploring with our carriers and reinsurers.”
Wendy also sees some retraction in the admitted market, with more business entering the Excess & Surplus Lines space.
ISC is also working on providing enhanced automation capabilities to facilitate the underwriting process for our Premier GL product, including the integration of additional third-party data pulls, according to Wendy.
In addition, ISC is looking to expand its Premier GL program footprint to include an additional 10 to 12 states in the future. The Premier GL program is currently in seven states, including in the challenging New York construction market, and covers a broad appetite of contractors, including general contractors on commercial and residential projects and more than 100 trade contractors.
Excess Liability insurance with limits up to $5 million is available with our primary business and unsupported on a nationwide basis.