Construction rebound opens new opportunities for agents

The construction segment has endured many challenges during the COVID-19 pandemic, from supply chain disruptions and material shortages to social distancing requirements and ill workers. In fact, seven in 10 construction business owners reported being negatively affected by the coronavirus, according to new findings from Nationwide’s Agent Authority study.

However, 2021 offers a silver lining as the economy rebounds, with 84% of owners expressing optimism about the strength of this year’s peak season and their businesses’ preparation to meet increased demand.

Related: Insuring new infrastructure projects against severe weather losses

Advising construction clients

One in five business owners who responded to the Agent Authority study said they lacked plans to help their businesses operate through economic uncertainty.

So, now as construction operations return to “normal,” owners will need expert advice to protect against new exposures and navigate tricky market conditions. This presents a huge opportunity for insurance agents to add value to existing relationships and build new ones.

“Due to COVID-19, many contractors have had changes in operations, exposures and staff,” Linda Stueber, Nationwide’s senior vice president of middle-market commercial lines, told PropertyCasualty360. “Contracts and contract wording or requirements may have changed. All changes can present changes in the coverages needed or required, so it is important that agents ask the right questions to determine what may have changed or could be changing.”

Those questions include asking about the type of work clients are bidding on and how similar or different that work is compared to pre-pandemic operations, Stueber suggested.

Cyber is also an increasing concern for construction offices and on job sites with electronic equipment vulnerable to cyberattacks, said Frank Abbatiello, president at USI Insurance Services, who has 35 years of experience in construction insurance.

“Agents should help clients understand their cyber exposures and make sure they have add-on coverage to protect against them,” Abbatiello said to PC360, adding that risk transfer is also critical for construction risk management: “As business owners take on contracts, they need to make sure the proper parties are taking on responsibility for any claims or mistakes that could arise. Proper risk transfer can also help clients save money on insurance premiums.”

Related: The construction insurance market faces rising uncertainty

Market opportunities

According to the new Agent Authority findings, almost half of construction business owners believe the economy will improve and 67% believe their revenue will improve within the next six months.

In this current economy, there are several pockets of the construction sector where insurance agents can find business opportunities, Abbatiello noted.

“First is infrastructure as the government is spending money, and those contractors are the first to hit the ground running with projects. We’re also talking to street and road contractors as spending ramps up to repair roads and highways and get workers back to work to support their families,” he said. “Additionally, many contractors are focused on diversified and affordable housing projects as the work is being subsidized and people need more affordable places to live in and around cities. Finally, we see state agencies spending a lot of money on public works projects in communities, like rebuilding or adding public facilities such as parks and recreation centers or education facilities.”

Stueber sees possible business potential in retro-fit operations for offices and retail as well as residential construction; however, the construction segments agents can tap for new business will largely be determined by where they are located and the types of businesses domiciled there, she explained.

Related: Mid-market clients struggle to understand insurance needs, coverage

Building long-term relationships

For the Agent Authority research, Nationwide commissioned Edelman Intelligence to survey 200 U.S. middle-market construction business owners between January 5-14 to understand the impact of COVID-19 on their businesses, their outlook for 2021, and their experience working with insurance agents.

One highlight from the survey’s findings is that most construction owners (89%) trust their insurance agent’s guidance and feel they can build a relationship over time. Eighty-seven percent also said their agent regularly checks to make sure their policy is adequate for their needs.

“By opening a dialogue now to hear their client’s business needs and share expertise and counsel in the short-term, agents can build stronger long-term relationships to be prepared to implement that counsel when construction owners are confident their business will improve,” said Stueber.

For more findings from Nationwide’s Agent Authority study, check out the infographic below.