What’s new this year? For contractors and construction pros wondering what the future holds, we’ve looked at the forecasts from some of the leading construction industry insiders and contractor insurance experts to give you the inside scoop.
2016 is going to be a great year for construction pros.
Take a look at some of the expected trends in your industry, the insurance market, and our suggestions on how to turn these opportunities into even greater profits this year.
Continued Overall Construction Industry Growth
Industry experts agree, 2016 looks good for construction growth. Dodge Data & Analytics, publisher of the Dodge Construction Outlook, forecasts a 6% ($712 billion) rise in U.S. construction starts for 2016.
Construction spending in the latter part of 2015 reached a seven-year high, according to an analysis by the Associated General Contractors of America (AGCA). While all sectors experienced growth last year, there was a definite trend in healthcare and higher education projects that is predicted to continue into 2016.
Here’s how to capitalize on these new opportunities:
The big takeaway for the rise in overall construction growth, specifically in public sectors such as education and healthcare projects, means contractor bonds are more important than ever.
If you want to take advantage of the public sector projects available, make sure you are current on all of your security bonds. The use of security bonds makes it possible for the government to use private contractors for public projects.
Even if you don’t work on public projects, maintaining current bonds can also help you win bids on private projects, too.
Being bonded ultimately protects the customer, and gives you a competitive advantage over contractors who aren’t fully bonded (or even licensed).
Now is the time to get current on your bonds, so you can bid on an increasing amount of public projects, and advertise your bonded status to win more private project bids as well.
More Claims Due to a Younger Workforce
One of the biggest issues facing the construction industry in 2016 is a lack of skilled workers. Older, more skilled workers are retiring and leaving the workforce, and being replaced by younger, less experienced workers.
And that younger workforce is leading to more contractor insurance claims.
Insurance professionals have seen an increasing amount of auto claims, workers’ compensation claims, and even construction defect claims as a result of the younger, less-skilled workers on construction projects.
How can you reduce claims on your projects and keep your premiums affordable?
Extra training and an emphasis on workplace safety will be key to reducing claims due to a more youthful, inexperienced workforce.
In addition, you can reduce the likelihood of auto claims by checking driving records before you hire new workers, and periodically throughout the year after hiring.
If you can stay ahead of the game, and reduce the claims from a less-skilled, younger workforce, you can keep your premiums affordable and put more cash back into your business.
Construction Industry Growth Means Insurance Market Growth
The anticipated continual growth of the construction industry means more growth in the insurance market, and that is good news for contractors.
As more and more insurance agencies offer contractor insurance, construction professionals will benefit from the competitive marketplace.
Today’s insurance market is optimal for you to get the best coverage at the best prices.
Now is the best time for you to shore up your defenses, and protect your construction business with additional policies. If you have been limiting yourself to general liability and workers’ comp, 2016 is the year to add a builders risk policy or commercial auto policy to your coverage, as well.
Many contractors are even seeing rate reductions on their current policies, which means they can add extra coverage without any additional out of pocket expenses.
While it’s always a good idea to shop around for the best rates for your business, you can often save even more money on insurance by combining multiple policies with the same insurance provider. You may be able to get policy discounts by adding a builders risk policy to your existing general liability, for example.
If you haven’t seen a drop in insurance premiums, there may be other ways you can save on your current policies as well.
Keep policy information up-to-date. If you’ve retired vehicles, reduced your employees, or sold equipment, you may be able to save money on existing policies.
Don’t let coverage lapse. Often times you can get premium discounts for maintaining coverage. Cancelling policies during slow seasons and then re-applying for them later can even cause your premiums to increase.
Pay annual premiums up front. If you have the extra cash flow, electing to pay your annual premiums upfront may often save you a substantial amount of money.
2016 is looking to be a great year for construction professionals, and for the insurance market, as well. You are in a great position to take advantage of the new projects and additional money anticipated to be available for the construction industry, and the competitive pricing in the contractor insurance market. As long as you can protect yourself from increased claims as a result of a new, inexperienced workforce, 2016 could very well be a very profitable year.