Author, Sam Clayton, Vice President, Construction Group, Rancho Mesa Insurance Services, Inc.

As a result of COVID-19’s impact on the overall economy, the construction industry will likely see some strong head winds not only operationally, but also from a risk management and insurance standpoint in 2021.

Construction contractors are likely to feel the effects of economic uncertainty, insurance premium increases and labor storages moving forward. Specifically, when planning for 2021, contactors should consider:

• Economic Uncertainty

  • Funds may not be available as city, state and federal budgets are reduced.

  • Projects may be delayed or canceled.

  • Your back log of projects may be reduced.

  • Surety companies may implement tighter requirements.

• Insurance Impacts

  • The commercial insurance market may harden causing increased premiums.

  • Insurance carriers may have a limited capacity as they have been affected by the pandemic and natural disasters.

  • New exclusions may be added as policies are renewed.

• Labor Force Decreases

  • Employment Practices Liability (EPL) Exposure may increase as new and/or inexperienced employees are hired.

As we move into 2021 and begin to face these challenges, we’ve developed the following steps and actions you can take to help minimize these concerns:

• Economic Uncertainty

  • Audit your existing backlog and determine which projects may experience delays or cancellations.

  • Review and audit your existing surety program to make sure you have adequate capacity to meet your present and future surety needs.  Rancho Mesa’s Surety department has a best practices audit program to assess your needs.  Complete an interest form and our team will be able to assist you.

• Insurance Impacts

  • Meet with your insurance advisor and start the renewal process 90-120 days prior to your renewal.

  • With your insurance advisor, review all new coverage changes, conditions, and exclusions that will impact your risk management program.

  • Accurately project your rating basis (field payroll/sales) that will affect your workers’ compensation, general liability and excess insurance premiums.

• Labor Force Decreases

  • Use best practices during any labor reductions to limit EPL exposures like wrongful termination, discrimination, etc.

Through Rancho Mesa’s RM365 HRAdvantage™ Portal, clients have access to a library of resources and 50 human resources consultants to answer your questions and provide you information in making those decisions.

To discuss your 2021 risk management plans, contact me at (619) 937-0167 or sclayton@ranchomesa.com.