Workers’ comp – Why agents need to pay attention to small construction firms

Small construction companies diversifying in response to economic pressures are opening themselves up to more exposure, an Insurance Business executive said.
Edmund Dabrowski, SVP of workers’ compensation at Builders & Tradesmen’s Insurance Services (BTIS), emphasized the need for more attention to the risks companies face, especially amid challenging economic conditions. Rocklin, California-based BTIS specializes in small construction businesses.

“Because of the more difficult time, approx [businesses] taking jobs that a carrier won’t even accept? Do you jump on a roof to fix multiple roofs during a bad storm?” he asked. “Those are the things agents need to know.”

“The correct classification of the risk is the most important. With small companies, the exposures change as they grow. They may become specialized. For example, they may be a painter and then be attracted to the installation of wallboard Each classification carries its own rate.

“The agent must be in constant contact with their insured to ensure the company’s salary and the exposures.”

How will challenging economic times affect the construction industry?

For Dabrowski, the industry often ignores small construction companies, which lead to relatively low premiums. But agents should be more attentive to this market, he argued.

“What we find is that during recessionary or inflationary periods, we have an increase in the number of small insureds,” he said. “Especially in these economic conditions, some of the small insurers are starting to grow and some are medium-sized. [firms] decreased.”

This is because medium and large companies tend to see less business during a recession, as homeowners and businesses scale back their construction projects.

Dabrowski further explained: “In inflationary times, a homeowner can’t buy a new house, so they say we’re going to add an addition here or we’re going to do a kitchen renovation. or any room that can.

“What happens when you have some of the medium and large construction companies, they will be negatively affected during the recessionary period because there will not be enough work for large jobs, so they will lay off some of their skilled workers.Skilled workers, in turn, secure their licenses and become trade professionals.

Labor shortages increase risk for small construction companies

Small construction companies trying to thrive through the current downturn should regularly talk to their agents about company coverage for their workers. Their exposure increases as they add more employees to their payroll or add different businesses to their portfolio.
“Another important part here is that workers’ comp policies are audited,” Dabrowski said. “The last thing you want as a company owner is to get a big audit at the end of the year.

“Therefore, it is important that agents and insureds have a regular dialogue on changes in their payroll. If they add or fire employees, that will affect the final premium. “

In addition, the lack of construction workers has a negative impact on small businesses. Accident rates in the first 60 days of a new job in the construction industry have skyrocketed, according to Dabrowski.

“For the first few months of operation, the number of claims was off the charts. But because there is an employee with a longer term, the frequency rate of injuries is reduced,” he said.

“Damages will be reflected in higher premiums for the insured. If you have enough of them, it will be reflected for the entire industry.”

How can agents better serve small construction firms?

Risk management is essential for clients in the construction space, and agents who make regular and consistent check-ins with small insureds will set themselves apart in the market.

“Agents who watch their insureds, their loss ratio, profit, and their retention in their book of business do better than agents who don’t,” Dabrowski told Insurance Business.

“The agents who set themselves apart from the rest of the pack are the ones who reach out to their insured on a regular rhythm, and ask them, ‘What jobs are you taking on? Have you added any employees? ? Did you talk to your group?’

“Those active agents are the ones with the best retention, the lowest loss ratio and have the most clients in the long term.”

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