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The Infrastructure Investment and Jobs Act, signed into law a year ago, will provide roughly $550 billion in federal spending over the next five years, much of it aimed squarely at the construction sector in the form of civic improvement, infrastructure and other projects.
Insurance industry experts are keenly aware of the potential huge increase in demand for coverage related to the projects but say so far it has been mainly anticipation rather than participation. Substantial added construction activity could further challenge an already tight labor market, they say.
The infrastructure bill will have some effect on the construction sector, but “it’s going to take some time,” said Irvine, California-based Song Kim, senior vice president, construction, at CNA Financial Corp. “It just takes time for the money to get appropriated down to a state and local level.”
Mr. Kim said that larger projects in geographical proximity to each other could further exacerbate an already tight labor market as projects compete for talent.
Rob McDonough, New York-based U.S. construction practice leader at Marsh LLC, said, “We knew it would take a while … but has been slower than we thought.”
Mr. McDonough added, “We are seeing the early dollars come out around street and road work.”
The added labor needed for the projects is likely to further strain an already challenged labor market and could lead to a project queue. “You can’t do all the work with finite labor and resources,” Mr. McDonough said, adding that planners will need to be “strategic” in deciding which projects to pursue.
“A historic shortage of skilled workers has the potential to lead to more workers compensation, liability, builders risk and other claims. And record inflation and supply chain disruption mean these claims will likely be more expensive,” said Aldo Fucentese, Boston-based chief underwriting officer, construction, in Liberty Mutual Insurance Co.’s global risk solutions division.