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Evaluating Insurance Needs: Trends and Costs in Heavy Construction (2012 Overview)

This overview discusses the evolving insurance landscape, specifically focusing on the heavy construction sector as it emerges from a soft market. Key factors contributing to the hardening trend include natural disasters and poor investment returns. It covers essential topics such as commercial general liability, auto liability, and inland marine/property insurance, outlining vital coverage gaps and factors influencing costs. The piece emphasizes the importance of risk assessment, claims history review, and tailored deductible options to equip companies to prepare for rising insurance costs as industry activity increases in 2012/2013.

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Evaluating Insurance Needs: Trends and Costs in Heavy Construction (2012 Overview)

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  1. Evaluating Insurance Needs, Trends & Costs August 29th 2012

  2. Overview

  3. Industry Climate - Insurance • Industry coming out of “soft” market • Typically begins in surplus lines arena, then trickles over to standard marketplace • Factors for “hardening” trend include natural disasters, poor investment returns, claims experience

  4. Industry Climate - Heavy Construction • Companies running lean • Top talent and equipment retained (varies) • Liquidation of equipment/downsizing of staff • Acquisitions/Mergers • Diversification of projects/expansion into new sectors (oil & gas e.g.)

  5. First of all - What am I paying for? • What are the key factors in the cost calculation? • What you do • Where you do it • How much of it you do • How well you’ve been doing it! • How much “stuff” you have • Let’s drill down to some specifics by line of business

  6. What effects my Insurance? Commercial General Liability Answer: What you do, how much you do it, and where you do it • Coverage gaps to watch out for: • Mobile equipment • Riggers liability • Reinstating per project aggregates • Factors for best rate consideration • Certified and/or seasoned personnel • Regularly maintained equipment • Utilization of favorable contract provisions

  7. What effects my Insurance? Commercial Auto Liability Answer: Where you are, how far you go from where you are & who’s driving? • Coverage gaps to watch out for: • Not many • Factors for best rate consideration: • CSA/SMS data • Says a lot, could be right or wrong though • Motor vehicle records!

  8. What effects my Insurance? Inland Marine/Property Answer: How much “stuff” you have, where you have it • Coverage gaps to watch out for: • Undervalued Equipment- Cost to replace • Down time if a loss occurs- Business Income • Factors for best rate consideration: • 3rd party equipment inspections • Operator Certification-NCCCO

  9. Get Involved-Risk Participation • First step - Assess your risk tolerance • Partner with your agent to review claims history • Determine claims frequency & financial range • Next step – select from two options based on the size of your company • Deductibles • Self-Insured Retentions (SIR’s)

  10. Get Involved - Deductible Example • Average Auto Policy for Heavy Construction • Frequency: 12 claims per year • Average incurred payment per claim is $8,500 • 2 claims in excess of $9,000 • Recommend Deductible Level: $10,000 • How does this benefit me? • Annual cost of insurance • At renewal time

  11. What can my Insurance do for me? • A provider for a specialized industry with high severity potential must be equally specialized. Service offerings include: • Comprehensive safety program review or new program implementation • Full-time risk management team provides contract review services • Accident checklists, put you in most favorable position possible in the event of a loss

  12. 2012/2013 Industry Forecast • Revenue projections are trending upwards • Many companies are resource short as a result of downturn, scrambling for personnel and equipment to accommodate demand • When things start moving fast, things tend to run loose-”Slow is fast, spraying is prayin’” • Early results: more accidents

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