Construction risk managers should prepare for extreme weather

SEATTLE — Risk managers for construction firms should prepare for strong hurricanes and torrential rain events over the next few years, experts say.

A 30-year hurricane cycle is due to end in 2025, and hurricanes are normally strongest toward the end of such cycles, said Michael D. Widdekind, technical director for property, risk engineering at Centreville, Maryland-based Zurich Services Corp., a unit of Zurich Insurance Group Ltd.

He spoke at a session on mitigating the impact of severe weather during the International Risk Management Institute Inc.’s 39th annual Construction Risk Conference in Seattle last week.

To prepare, the current trend is toward simplified checklists and away from the “three-ring binder with 500 pages,” which is “not going to do anybody any good,” Frank Wampol, corporate vice president for safety and health at Birmingham, Alabama-based BL Harbert International LLC, said during the session.

Other advice suggested by the speakers included taking advantage of weather forecasts and taking steps to minimize losses several days before a storm hits, such as by removing equipment such as cranes that may be vulnerable to damage.

But be sure to take your employees into account in this planning, said Mr. Wampol. While minimizing losses is important, “Don’t let your people get so caught up in trying to protect those assets” that they do not protect themselves.

Hardening market, emerging risks

During a session on tips for preparing insurance specifications in a hardening market, Steven D. Davis, Birmingham-based senior vice president and director of the construction division at brokerage McGriff, Seibels & Williams Inc. said risk managers should be sure excess policies follow primary policies’ form.

Mr. Davis also discussed how formal presentations to underwriters can help construction firm risk managers in the hardening market.

Another conference session focused on real estate development errors and omissions risk and insurance. Audrey Lau, Dallas-based construction professional product head at Hiscox Ltd., who works with property management services firms, said during a session on real estate developers errors and omissions risk that she is seeing many plaintiff attorney firms becoming “pretty aggressive around the country trying to file claims” under the Americans with Disabilities Act, “testing to see what they can get.”

Claims include charges that websites are inaccessible to the blind, she said.

“There’s a lot of potential there (for plaintiffs) because fines can be up to $75,000 for violations,” and there is potential for compensatory damages as well. This is “one of the major issues we’re looking at in terms of property management claims right now,” she said.

A session on cyber risks described the steps risk managers for construction firms should be taking to protect the companies, including obtaining insurance, evaluating assets and putting plans in place to protect them.

Richard R. Volack, a New York partner with Peckar & Abramson P.C., which specializes in construction law, suggested companies introduce a test phishing program to see the degree to which people are clicking on supposed malicious links.

During a session on builders risk, François Wasselin, London-based senior vice president of American Global LLC, a brokerage that focuses on the construction industry, said each insurer has a different policy form, so “it can be pretty complex to navigate and makes review of the policies even more important.”

“You need to get the nitty gritty details of the policy itself,” he said. “There’s no right or wrong. It really depends on product appetite” and what risks firms are willing to take on their balance sheets, he said.

Impairment in the workplace

Dr. Marcos A. Iglesias, Hartford, Connecticut-based vice president and chief medical director at Travelers Cos. Inc., presented evidence of the impairments marijuana use can create during a session on marijuana and the workplace.

He said the unavailability of an adequate test to determine the extent to which workers are impaired by marijuana is a problem. The same problem exists, he said, with detecting impairment from other causes, such as the worker who takes Benadryl, or the employee who did not sleep for three nights because he was taking care of an ill child.

 “We want to ensure as employers we have mechanisms” and procedures to determine who may be impaired, he said.

Dr. Iglesias also discussed how the determination of whether marijuana use should be legalized has become subject to vote, rather than being based on medical evidence. “The drug should be subject to the same standards that apply to other medications,” he said. “What were we thinking when we put these things to a vote?”

A general session featured officials of Seattle-based Hoffman Construction Co., which completed a $100 million renovation of the city’s iconic Space Needle in 2018 that brought the structure up to current seismic codes and installed a rotating glass floor at its top, all while largely keeping the building open to the public.

During another general session, Richard McElhaney, a Venetia, Pennsylvania-based safety consultant, described his own horrific 2004 workplace accident, when he was injured by a high-pressure water blaster, and his eventual partial recovery in a dramatic presentation that included a speech by his wife, Karen.

He said he still cannot feel his legs below his knees, which hampered activities with his children.

Mr. McElhaney said he had not followed his own safety rules, which included conducting a job safety analysis, and his family “is still paying for my mistake.”