Navigating a hardening insurance market in constructionPosted On: Nov. 13, 2019 3:06 PM CST
SEATTLE — Formal presentations to underwriters can help risk managers of construction firms navigate the hardening market when buying or renewing insurance, says a broker.
“We do that with several clients,” said Steven D. Davis, Birmingham, Alabama-based senior vice president and director of the construction division at McGriff, Seibels & Williams Inc.
He spoke Tuesday at a session on tips for preparing insurance specifications in a hardening market at the International Risk Management Institute Inc.’s 39th annual Construction Risk Conference in Seattle.
“We get everybody in the room, and we have the client come in and present their risk (to underwriters) with overheads and PowerPoints,” giving underwriters the opportunity for individual question-and-answer periods later, Mr. Davis said.
“Start early,” he recommended, noting he started working on Jan. 1 renewals with his clients a month ago.
Mr. Davis also suggested that risk managers repair underwriter relationships they may have abandoned during the hard market to obtain lower rates.
Risk managers should also be sure to work with an experienced underwriter, he said. Those with labor law exposure in New York, for instance, should make sure they are working with someone who understands the topic, he said.
“There’s a lot of young underwriters and brokers who have never seen a market like this,” as well as third-generation contractors. “One of the things to try to do is to build relationships with people who understand our business. It makes a difference,” said Mr. Davis, who said he has personally been through three hard markets.
Focusing on auto liability, where he said the hardening market began, Mr. Davis recommended that risk managers not necessarily focus on heavy trucks.
“The underwriting community today is really looking at your (entire) fleet, the size, the number, the radius of how far you’re driving. You’ve really got to get granular with all of this,” he said.
Excess casualty underwriters are looking at the total loss experience, not just heavy pickup trucks, he said.
Look at losses, stratify them, and do not just show underwriters the loss runs, “but give them granular details about what that claim is about, and what did we do about this claim, and what did the contractor do about the claims post-accident,” so they can see that this type of claim never happened again, such as by requiring that phones be turned off, said Mr. Davis, referring to accidents caused by distracted driving while drivers are on their cellphones.
“You’ve got to create a real message back to the underwriting community — not a story, but a real message about what you’re doing,” said Mr. Davis.
Starting with auto liability, for instance, “get safety people engaged.” For instance, tell them, “Here’s what we’re doing about selecting drivers,” he said. “Drill down on the automobile side,” he said. “I think if you do that, it’ll make a huge difference.”
Exposures coast to coast
Discussing general liability risks, Mr. Davis said there are “two ends of the spectrum”: the California wildfires and New York labor law.
“If you have that exposure in California, you’d better be prepared” to present detailed information, including how you are closing out the job, the “hot work” or the cutting and welding operations conducted, and pole placement. “All those things will be extremely important if you move into that space,” he said.
He also discussed the labor exposures in the New York market. “That’s not doing to change probably in my lifetime for sure, but it may change one day,” he said.
Mr. Davis said the average labor law case adds up to around $3 million. “You can start at the workers comp level,” but these cases often result two years later in a lawsuit filed by a plaintiffs attorney.
Mr. Davis said his policy is to have an investigative team set up a liability file as soon as the initial claim is made to prepare for a subsequent lawsuit, which includes information such as social media postings, “which is a pretty cool way” to learn about someone who may falsely claim he has a bad back, Mr. Davis said.
“This helps us manage what happens afterward” if a lawsuit is filed, he said.