Construction trends: how innovative collaboration can mitigate risk transfer failures
In the construction sector, risks are complex and have been exacerbated by global economic trends. Now, innovative risk solution services, combined with a data-rich approach, can mitigate problems before they occur, says Valarie Jonas, director of Construction Claims, Markel.
Construction firms face a compounded set of risks in the post-COVID-19 world. From stubbornly high inflation to skilled labour shortages and spikes in demand for materials that are meeting supply shortages and supply chain interruptions head-on, the challenges are myriad.
But insurers can help the sector deal with these complex and interrelated pressures using innovative solution services, says Valarie Jonas, director of Construction Claims at Markel.
Jonas says that the current risk landscape in construction has evolved for a number of reasons.
For example, the current shortage of skilled workers in the US is down to the fact that the skilled labour force is retiring.
“Unfortunately, there isn’t an experienced workforce behind them to replace the retiring workers or to provide the necessary supervision and training for projects,” she says.
In spite of this skills shortage, building projects are still pushing ahead, which means fewer safety meetings are happening.
“This creates an environment where we’re seeing a concomitant uptick in significant worksite injuries, such as falls from heights or trench collapses,” Jonas says. “These are really terrible, needless, and often fatal incidents that can be avoided. An experienced foreperson would be able to implement basic safety precautions to prevent such accidents from happening.”
Jonas expects skills shortages to manifest themselves in a rise in construction defect claims further down the line.
On top of this, a spike in demand for materials has come just as the supply chain is being throttled by shortages and interruptions. A much-in-demand roofing material, thermoplastic polyolefin (TPO), illustrates this well.
“Roofers in Texas are unable to get this essential product for eight months out even if they’re a preferred vendor or client,” Jonas explains.
“When you can’t get the materials, it delays the job, which leads to trades walking off the site because they’re not being paid right away.”
Delays create greater potential for risks, as the longer a project remains unfinished, the longer it is exposed to weather. Jonas emphasises that this can lead to potentially serious construction defect claims once the project is finished.
Extreme weather also presents a “significant challenge”, she says.
For ongoing projects, Jonas is seeing weather impacting the sequencing of the building, which again gives rise to construction defects. For example, if the building is not wrapped at the time of a storm, the crew has to leave, the storm comes in and the crew comes back and wraps a now wet building—increasing the likelihood of defects moving forward.
