INDIANAPOLIS — The insurance and construction industries face common challenges, and risk managers, brokers and insurers should collaborate to tackle them, said Douglas Worman, president and CEO of CNA Financial.
The implementation of artificial intelligence, addressing increased court awards and settlements and attracting staff from diverse backgrounds are issues for both sectors, he said Monday during the opening session at the IRMI Construction Risk Conference.
“Few sectors are intertwined as much as the construction industry and the insurance industry,” Mr. Worman said.
The construction sector builds the physical backbone of the economy, and insurers provide the financial resilience to support it, he said.
Both sectors are looking to use AI technology to improve safety, and the success of the implementation will be mutually beneficial, he said.
Technology is also used to evaluate risks and data, and to tailor coverage and pricing for individual policyholders, Mr. Worman said.
Construction policyholders and insurers also face the challenge of increasing litigation costs, fueled by the growth of third-party litigation funding, in which investors finance plaintiff lawsuits in exchange for a share of the judgment or settlement, he said.
“Inflated verdicts often arrive even when contractors follow every protocol,” Mr. Worman said. “This is the No. 1 battle for us. It’s the No. 1 priority because it continues to escalate and it’s a major problem.”
The construction and insurance sectors also face staffing concerns, as many older workers in both industries are expected to retire in the next five years, he said.
“We need to have a renewed focus on attracting and training and retaining diverse talent,” Mr. Worman said.
CNA has programs to recruit former military engineers to train as risk control engineers and is focusing on apprenticeships, internships and mentorship programs, he said.
Different parties in both sectors should collaborate to improve risk management and risk transfer, Mr. Worman said. Construction companies should present data to differentiate their risks, brokers should develop new solutions to manage exposures, and insurers need to share data to explain their underwriting decisions.
“Being communicative about what we’re all seeing and what it costs is super important,” he said.