Peter Arkley joined Alliant Insurance Services Inc. in June 2011, and was appointed in April 2017 to oversee Alliant Specialty Group, which includes aviation, agribusiness, public entity, health care, real estate, energy and marine, executive risk and construction. He is directly responsible for insurance and surety operations including owner controlled and contractor controlled programs, environmental, professional, subguard and contract, and commercial bonds, as well as for the development and implementation of the construction business and financial strategy. Prior to joining Alliant, Mr. Arkley served as CEO of the construction operations at Aon PLC. He spoke recently to Business Insurance Reporter Matthew Lerner about the issues facing construction risk managers, the impact of technology and the state of the market. Edited excerpts follow.

Q: What are the chief challenges for construction industry risk managers today?

A: I think that the biggest issue confronting the contractors today, and risk managers, is qualified labor, which of course leads to a lot of other issues involving claims when it comes to workers compensation, protecting property and mitigating any kind of third-party laws.

There’s a lot of major projects going on throughout the country, and qualified labor is a very big issue for the contractors that continue to bid the work and provide proper risk management.

Also, as these contracts get larger and larger, owners are trying to shift as much of the risk to the contractor as possible, so it’s very important for the contractor to really understand the contracts that they’re signing.

That’s why we support our contractor base to make sure that they are mitigating those potential liabilities and that there’s the proper sharing of risk with the owners.

Q: In terms of market conditions, what do you see out there?

A: The market today is very competitive. We haven’t had a hard market in construction in quite a while, more than a decade. A lot of markets have entered the construction marketplace in insurance, and they’ve been very competitive.

I would say that we’re not looking at any drastic cycles in the construction space in the near term. I think that there’s plenty of capacity out there, and generally the markets like the business. Right now, we’ve got more than 20 markets that are prepared to write accounts on the construction side

When you get into the multibillion-dollar projects, it’s more limited in a sense. You may have six or seven competitive markets in multibillion-dollar projects, but there’s no lack of competition among the insurance companies for the construction business. It’s very good right now.

Q: What are you hearing from your clients in terms of feedback — their wants and needs?

A: We really have to be an extension of their risk management operations. I think there’s some expectation that we’re going to be involved in contract review. We’re going to provide loss control services for their job sites and we’re going to be advocating in a strong way for them on the claim side. They have a solid relationship with their broker and look for their broker to be really a true extension of their risk management operations. Most contractors don’t have very large risk management departments, and so I think they count on the brokers who have a real specialty in the construction space in support of their business.

Q: How is technology changing your role, your job? What effect is it having on your clients?

A: Technology has come of age in the construction space. Contractors are using drones today for their job sites to observe the entire site and really look at areas of the site that might be unsafe for workers to go. That’s been a big asset for a lot of the contractors.

Also, wearables today can help risk and safety managers basically keep track of everybody on the site. So, even if there’s a trip and fall that’s not reported, they can have that information on the wearables that the contractors are wearing.

Building information modeling, BIM, is a new technology which shows the project in three dimensions over time and helps show where there might be gaps in the engineering of the project.

I think contractors today benefit not only from the safety aspects of technology, but it also helps them tremendously from a cost and estimating aspect as well.

Q: What advice would you give to the construction risk manager?

A: Senior management at a construction company needs to be actively involved in loss control safety. That’s a key. That sets a tone, sets a culture in the different construction companies.

When I look at the business today, one of the areas that’s of real value to the contractor is subcontractor’s default insurance. That’s a big asset for the general contractor today, to have that product.

It’s an area of the business that I’m always concerned about, because there’s a limited amount of markets writing SDI (subcontractors default insurance). Right now, you’re only talking about three markets, four markets at the most, that might participate in SDI.

I think another thing I would say to a risk manager today is that there has to be an outstanding prequalification program in place for the subcontractors that are going to be used on the projects to make sure that they have the ability to complete the project, because obviously, contractors are not just doing one job for you. They’re working on multiple projects at the same time. You’ve got to make sure they have the technical ability to finish the job, as well as the financial ability to do the job.