Selective Insurance, a leading business insurance carrier with specialized expertise in the construction industry, today released a report on general contractors, risk, and insurance. Selective’s General Contractors Risk Report presents data and observations for the various risks general contractors often experience, along with construction industry forecasts and business and safety management implications.
“Construction is an inherently high-risk industry given its exposure to and reliance on macroeconomic factors, such as commodity pricing, supply chain, labor dynamics, and housing demand. For general contractors, their ability to identify, anticipate, and manage a range of workplace risks can determine the success of their projects and, more importantly, their business resiliency,” said Jim Albi, Assistant Vice President, Contractors, Selective Insurance.
Selective’s General Contractors Risk Report provides a comprehensive analysis of the residential and non-residential construction industry, including trends, insights on workers’ compensation, auto and completed operations claims, and predictions on key business drivers such as supply chain, technology, and labor. The data is based on internal claims and underwriting information, supplemented by external data and unique qualitative insights from Selective’s unique operating model that includes regionally-based claims, underwriting, and risk management employees.
Economic Risks for General Contractors
The General Contractors Risk Report highlights the three significant operational risks faced by general contractors:
- Inflation: Higher material and commodity prices increased the need for protection against property damage during construction.
- Labor: The labor shortage created a need to hire more inexperienced workers, resulting in increased incidents of injury and workers’ compensation claims.
- Subcontractor Risk: Responsibility for subcontractors’ errors has long been a general contractor risk, but it is heightened with high prices, labor scarcity, and material shortages.
General Contracting Construction Outlook
Informed by Selective’s expertise and regional insights, the General Contractors Risk Report includes a forecast for what’s to come in construction for the remainder of 2023, including the following trends:
- The push to attract more women and minorities to the construction industry will continue.
- There will be increased demand for multi-use properties that combine corporate and entertainment centers with residential opportunities.
- General contractors will increase their use of technology in every aspect of their operations.
- The current shortage of drivers with commercial licenses will persist.
- Commodity price volatility will continue.
- General contractors will seek to grow their businesses into related fields, such as design-build and offering more one-stop, turnkey services.
- Single-trade contractors will expand their businesses into multiple trades or general contracting.
Selective and its independent insurance agency partners provide unique risk management solutions, safety management expertise, customer-centric claims service, and superior customer service to more than 80 types of businesses. Contractors represent a significant portion of Selective’s 2022 commercial lines customers. The General Contractors Risk Report is one of Selective’s many resources available to help general contractors understand and address risks facing their business.