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Experts shed light on construction insurance trends

Insurers are facing rising construction costs and regulatory pressures. Here’s how brokers can stay ahead in the construction market

Carl Dowling

Upland Specialty Insurance

Industry experts

Jeff Benson

Victor Insurance Managers LLC

Carl Dowling, JD, CPCU serves as senior vice president of casualty construction underwriting for Upland Specialty Insurance. He has over 20 years of experience in the P&C insurance industry, including over a decade in the wholesale E&S sector. Dowling is highly technical and uniquely qualified with a law degree and a background in risk management, product development, claims, and underwriting. As a subject matter expert on renewable and non-renewable commercial and residential construction risks, he utilizes his experience and expertise to build long-term internal and external relationships that are focused on underwriting consistency and profitability.

Upland Specialty Insurance

Carl Dowling

Jeff Benson is an accomplished professional with over 30 years of experience in the insurance industry. Currently serving as the builders risk and contractors equipment program leader at Victor Insurance Managers LLC, Benson plays a pivotal role in overseeing and managing these programs. With his extensive expertise and deep understanding of the industry, he is dedicated to driving continual growth and ensuring the success of these programs.

Victor Insurance Managers LLC

Jeff Benson

“The E&S space has seen double-digit growth over the last five years, and that market is now worth over $86 billion. I would expect that to continue”

Carl Dowling, Upland Specialty Insurance

THE US construction insurance market is experiencing significant shifts driven by a combination of rising project costs, evolving regulatory requirements, and a more dynamic claims environment. To explore these changes, Insurance Business hosted a roundtable discussion featuring Carl Dowling, SVP of casualty construction liability at Upland Specialty Insurance, and Jeff Benson, builders risk & contractors equipment program leader at Victor Insurance Managers. Both leaders offered insights into the latest trends shaping the construction sector and the implications for brokers navigating the excess and surplus (E&S) market.

Benson also noted that updated building codes and new trends in green building practices are influencing insurance premiums. He highlighted the value of updated codes from an underwriting perspective but noted that they contribute to rising project costs. “When it comes to building codes, they’re great from an underwriting standpoint, and they actually mitigate losses,” he explained. “But on the cost side of things, the projects are costing a lot more, so there’s a trade-off there.”

Benson noted that while construction costs are rising, the quality of building is improving as well. He advised brokers to adopt a more consultative approach as insurance costs take up a larger portion of clients’ budgets. “From an industry standpoint, as our pricing goes up, we’re going to become a bigger part of someone’s budget. The broker needs to become more consultative in nature, because that’s critical to success,” he said. He also warned of the increasing risk associated with construction in areas vulnerable to natural disasters, urging brokers to work closely with underwriters to secure coverage capacity for such projects. The roundtable concluded with both Dowling and Benson reinforcing the importance of a proactive approach to policy management, regulatory awareness, and relationship-building as the construction insurance market continues to evolve.

Dowling noted the sector’s remarkable expansion, sharing, “The E&S space has seen double-digit growth over the last five years, and that market is now worth over $86 billion. I would expect that to continue.” Benson added that increased project costs and delays are now commonplace, saying, “Construction projects are taking longer, they’re costing more to complete, and we’re seeing more catastrophic events” – trends that have had profound effects on the industry in recent years.

“They’re expected to bring trillions of dollars in funding from the US government, resulting in millions of jobs to be created over the next decade – primarily in infrastructure,” he noted. This increased funding aims to bolster infrastructure, energy-efficient projects, and semiconductor manufacturing. However, Dowling also referenced specific state-level regulations such as Florida’s SB40, a response to the Surfside condo collapse, which mandates structural inspections for condominiums. While it provides added safety for homeowners, it has had a ripple effect on ownership costs, contributing to a 20 percent drop in condo sales across the state.

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Timothy J. Hall

Relation Insurance

Gerard Vecchio

MarshBerry

Industry experts

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Mashberry

Gerard Vecchio

Relation Insurance

Timothy J. Hall

In Partnership with

M&A Insights 2021

Insurance Business America uncovers the answers to brokers’ biggest questions about mergers and acquisitions, with expert insight from MarshBerry, Baldwin Risk Partners and Relation Insurance

Read on

Timothy J. Hall

Relation Insurance

Gerard Vecchio

MarshBerry

Industry experts

Relation Insurance

Timothy J. Hall

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec. Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo or24ci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.

Mashberry

Gerard Vecchio

Published November 13, 2024

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One of the significant themes at the roundtable was the changing regulatory environment and its impact on the construction insurance sector. Dowling pointed out that substantial government investments, like those from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, are pouring into the industry, potentially creating millions of jobs.

The impact of new laws and building codes

Upland Capital Group, Inc. is an AM Best rated “A-” VIII specialty property/casualty insurer headquartered in Dallas, Texas. Through its wholly owned insurance carrier, Upland Specialty Insurance Company, the company markets, underwrites, and services specialty insurance products in select markets to include excess transportation, casualty construction, excess casualty, primary general liability, excess public entity, professional liability errors & omissions, and excess cyber liability.

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Dowling and Benson both discussed the shifting claims landscape, focusing on the increase in theft, vandalism, and weather-related incidents. “We’re seeing an increase in theft and vandalism claims, and there are lots of things that insurance agents can talk to builders about to mitigate this,” Benson commented. “This includes lighting, cameras, and equipment to make the site safer. We also need to encourage them to have a better control of inventory, because sometimes, things can just disappear from sites.”

Claims trends and mitigation strategies

On the other hand, Dowling highlighted inflation as a major driver of increased claims costs, stressing the importance of adjusting insured values to reflect real-time asset values, especially as they continue to rise. “The number of things that you can insure has gone up, and so claims are also going to trend upwards,” he explained. “My advice would be to consider that values are likely to continue to increase, if by no other reason than the cost of inflation.” He advised brokers to have proactive discussions with insureds and underwriters to ensure adequate coverage limits that account for future values. Dowling advised brokers to carefully review exclusions such as action-over exclusions and sunset clauses, which can significantly affect claims outcomes.

“The best advice I can give anyone is to read your policy and understand what you have,” he warned. He particularly noted that builder’s risk policies can shift liabilities to subcontractors, making it essential for brokers to navigate these exclusions thoughtfully. Benson echoed these concerns, stressing that not all policies are created equal, which can lead to complications when a claim arises. “Know your policy, and don’t assume that every carrier’s policy is the same,” he said. “They can be dramatically different, and these differences really show up at the time of a claim.” He recommended that brokers regularly engage with underwriters, walking through claims scenarios to clarify coverage specifics.

“As our pricing goes up, we’re going to become a bigger part of someone’s budget. The broker needs to become more consultative in nature, because that’s critical to success”

Jeff Benson, Victor Insurance

Addressing how to manage mid-term policy changes, both speakers emphasized communication between brokers, insureds, and underwriters. Benson shared an example involving a builder increasing their planned housing units mid-year, underscoring how this impacts coverage and premiums. “If the agent is on top of communication with the builder, they should be able to go to the underwriter and say that the risk level has grown.” Similarly, Dowling noted that policy terms should be reviewed when project scopes change, as failure to adjust for increased exposure could affect profitability. He suggested brokers keep up regular check-ins to maintain accurate exposure levels, benefiting both the insured and the underwriter.

Looking forward to 2025, Dowling sees the E&S market continuing to expand, with new talent entering the industry and an increasing need for mentorship and knowledge-sharing. “We have lots of great young underwriters and producers coming in, and also a lot of new people coming into construction,” he said. “However, there are some experience gaps. The best advice I can give anyone is to build your network and your relationships. Make sure you’re learning from those who have the expertise, and pass the knowledge onto others. We could do the entire insurance industry a big service by collaborating more and really growing together.”

Looking ahead: the future of construction insurance

Victor Insurance Managers LLC is a leading global managing general underwriter. At Victor, underwriting management has been a distinct discipline for over 65 years. Our expertise lies in evaluating and underwriting risks, developing and executing risk management activities, and servicing accounts on behalf of our insurance carrier partners. We carefully select leading insurance carriers to partner with in our chosen markets and, in most cases, we act as the exclusive managing general underwriter. We then distribute our solutions through a large distribution network of licensed insurance agents and brokers. Victor’s mission is to consistently create superior products and to provide outstanding service and exceptional value to each and every customer. Our vision is to be recognized as an elite specialty insurance provider/distributor and grow through valued service, innovation, and expertise.

Victor Insurance Managers

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Upland Specialty insurance

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