As chairman of American Contractors Insurance Group Inc. and founder of the International Risk Management Institute (IRMI), Bill McIntyre knows more than a thing or two about the boom period being enjoyed right now by the construction industry — and the risks that have become exacerbated with that growth in business opportunity.
Sincerely committing to safer work sites, he explained, isn't just good sense and the right thing to do — it's also good business. "People are realizing that safety doesn't cost; that it could save you money, especially when it's coordinated with quality efforts," McIntyre told PropertyCasualty360.com just before the kickoff of IRMI's annual Construction Risk Conference in Indianapolis.
The ratio of man-hours versus accidents has improved, he notes, and an increased amount of best practices in site safety are being pushed down the chain from general contractors to subcontractors. That's helping to reduce the number of injuries on sites throughout the U.S. McIntyre also pointed to research by the Associated General Contractors of America (AGC), which recently released a new safety study and recommendations designed to help construction forms firms further improve the safety and health of their workforce.
AGC of America partnered with the Myers-Lawson School of Construction at Virginia Tech to conduct a comprehensive study of every construction fatality that took place over the three-year period from 2010 to 2012 (the latest year for which these statistics are available). While sites are continuing to get safer in terms of reduced accidents, said McIntyre, fatalities are up: 807 deaths were logged in 2012, a 9% annual increase from the year prior (741). In 2010, 790 deaths were reported. When things do go wrong on sites, they go very wrong indeed.
"We are making headway," said McIntyre, although he knows the industry has a long way to go to reach its desired goal of zero incidents. "This type of thing doesn't happen overnight, but it is happening."
Got skills?
The construction industry continues to be challenged by an insufficient amount of skilled labor to handle an ever-growing number of projects. "There's a dearth of qualified people who want to work in the construction business," said McIntyre.
Construction associations, he said, are stepping up recruitment by pushing educational efforts at high schools, putting up flyers at local restaurants, and paying bonuses to skilled people whom they can enlist from other industries, such as commercial truckers (a sector that's already facing a talent shortage of its own).
Additionally, hurricane-battered areas such as Houston and parts of Florida have sucked up a good number of workers lured by the promise of larger paychecks: McIntyre notes that laborers making $500 week on one job are naturally enticed to go earn $850 per week in disaster areas. That doesn't help the situation in Dallas, for example, one of the hottest construction markets in the U.S., when many of its talent are tempted to follow the money elsewhere.
Building a culture of safety at a construction company is imperative, but even more challenging to achieve with so many newcomers on the job. McIntyre says the more responsible firms are responding by sticking to their guns about having a good training program and not promoting people who don't possess the proper level of experience.
When asked about rate increases construction companies might be seeing, McIntyre said that in the past, insurers were too "optimistic in their underwriting" and not charging enough, which has resulted in raised rates for many players. Large losses are being seen on the commercial auto side, he noted, due to cell phone distractions and increased repair costs for vehicles that have more technology in them than in years past.
Those who choose not to be mindful of preventing losses, he adds, invariably suffer. "High insurance rates make you noncompetitive," McIntyre stated flatly. No matter how much you try to educate people in best practices, he added, you can't get everyone to understand that correlation. "It's a process of natural selection — they go out of business."
Moving forward
McIntyre remains committed to IRMI's role in helping to serve the construction industry, particularly in the area of educating members about risk financing. He's currently excited about a project involving virtual reality training for construction workers, an effort being led by his son, IRMI Executive Vice Chairman Stokes McIntyre. "We're really delving deep into behavior modification," he said.
In the meantime, "If we help one contractor learn more about construction risk management, then we've helped them," he added. "But if we can help an insurer do that who has 20 clients, we'll help 20 contractors. It's a two-pronged approach. We're working at improving the provincialism of the construction industry, and, in turn, helping the insurance industry."
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