The high-risk intersection of skill level and safe operations is traditionally a “proceed-with-caution” zone in the construction industry. It presents the greatest peril when owners and contractors are pressed to hire earnest but unskilled workers to bridge the gap between the current workforce and the staffing levels they need to meet demand.

Before hurricanes Harvey, Irma and Maria and the wildfires in California, put-in-place construction was forecast to make 2018 another expansion year for U.S. residential, commercial and industrial markets. A shortage of skilled workers was projected to continue into 2018 and beyond. Now, the huge demand for residential construction work after the devastation of the hurricanes and wildfires only compounds the demand for laborers to complete the work ahead.

Opportunities for insurers

All of this building activity underscores the many risks construction operations face: insuring the property itself, worker safety, various forms of liability and a challenging regulatory environment. Add the difficulty in obtaining coverage levels desired for large projects, and it all leads to an environment in which construction insurers must work hard to provide clients with the coverage they want and need. Insurers also have an opportunity to go further — to bolster clients’ programs in the fundamental and ever-critical area of safety management by designing support services that help construction firms become safer companies.

As of the third quarter of 2017, unemployment in the construction sector was close to that for the general population, and there are no labor pipelines waiting to be tapped. It may be that the balancing act between competing forces — increased demand versus increased materials cost, labor versus interest cost — could cap demand within a manageable level. If an imbalance gives the advantage to demand, bringing greater numbers of unskilled and inexperienced workers to jobsites will likely lead to higher workers’ compensation claims as well as increased potential for liability losses.