The high-risk intersection of skill level and safe operations istraditionally a “proceed-with-caution” zone in the constructionindustry. It presents the greatest peril when owners andcontractors are pressed to hire earnest but unskilled workers tobridge the gap between the current workforce and the staffinglevels they need to meet demand.

Before hurricanes Harvey, Irma and Maria and the wildfires inCalifornia, put-in-place construction was forecast to make 2018another expansion year for U.S. residential, commercial andindustrial markets. A shortage of skilled workers was projected tocontinue into 2018 and beyond. Now, the huge demand for residentialconstruction work after the devastation of the hurricanes andwildfires only compounds the demand for laborers to complete thework ahead.

Opportunities for insurers

All of this building activity underscores the many risksconstruction operations face: insuring the property itself, workersafety, various forms of liability and a challenging regulatoryenvironment. Add the difficulty in obtaining coverage levelsdesired for large projects, and it all leads to an environment inwhich construction insurers must work hard to provide clients withthe coverage they want and need. Insurers also have an opportunityto go further — to bolster clients’ programs in the fundamental andever-critical area of safety management by designing supportservices that help construction firms become safer companies.

As of the third quarter of 2017, unemployment in theconstruction sector was close to that for the general population,and there are no labor pipelines waiting to be tapped. It may bethat the balancing act between competing forces — increased demandversus increased materials cost, labor versus interest cost — couldcap demand within a manageable level. If an imbalance gives theadvantage to demand, bringing greater numbers of unskilled andinexperienced workers to jobsites will likely lead to higherworkers’ compensation claims as well as increased potential forliability losses.

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