Builder’s Risk Insurance (BRI) is a type of insurance that protects your client from financial loss if their construction project is damaged by fire, theft, or other losses. It has been around for years and will continue to be important in the future. Here are some trends your client should expect for the remainder of 2021.
Residential Construction Trends
Residential construction is expected to continue growing over the next few years. As the number of new homes increases, the demand for BRI will also increase.
This trend is attributed to many young adults moving out of their parents’ houses and looking for a home or apartment they can rent. These future owners must understand the relevance of Builder’s Risk Insurance.
As new homes are built and older ones repaired due to natural disasters, your clients should know how critical this policy insurance is in closing the housing gap.
How? The goal is to protect your client from losses due to natural disasters such as wildfires, earthquakes, floods, hurricanes, and tornadoes. Moreover, the insurance can impact the total rebuilding costs of your client.
Commercial Construction Trends
Builder’s Risk Insurance is also expected to grow in the Commercial sector. This industry covers damage to warehouses, office buildings, shopping malls, factories, and other commercial structures.
Over the past few years, Builder’s Risk Insurance has declined for this sector due to the slowdown of the global economy.
However, as your clients build new offices, malls, and factories throughout the remainder of 2021, they will likely need BRI. These constructions have a higher risk of being damaged by natural disasters or fire.
In a survey, the market rates for commercial insurance have an increase of 9.6%. Moreover, the growth of these rates will impact your clients through increased premiums, strict underwriting terms, and decreased capacity.
Non-Residential Construction Trends
There’s a significant increase in the non-residential construction sector, which includes dams and bridges. The demand for this insurance policy continues to grow each year due to demand from state governments.
These state governments have set up special Builder’s Risk Insurance programs for this industry. Builder’s Risk Insurance is expected to grow in the future because it provides more security for government projects that are expected to take several years or even decades to complete due to natural disasters.
Builder’s Risk Insurance Volatility
Builder risk insurance will be relevant throughout the year because several emerging pandemics began even before 2020. These pandemics include Avian Flu and Ebola.
The emergence of pandemics has affected the volatility of BRI. Premiums are higher, but your clients should understand that this should not be the deciding factor.
The current pandemic has affected many construction projects. Raw materials are getting expensive, especially wood frames. With these factors, construction is shifting to other building materials. Contractors are adopting efficient means to stay afloat despite the restrictions due to pandemics.
At these times, your client should see the critical role in ensuring the important aspects of their construction projects.
Selective Carriers and Insurers
Underwriting construction companies at a loss have been the norm in the insurance industry for many years. With the growth in activity, though, underwriters have been inundated with applications.
The development of the construction business is creating new possibilities for insurance underwriters. Your clients should know that insurers are now able to choose which accounts they want.
These insurers are being more selective on best-of-class business, and this fact is making it easier for them to have their pick. This selectiveness could be counterproductive for some clients with a lesser than stellar reputation in insurance policy claims.
Shift to Digitalization
Your clients might argue that the construction industry isn’t affected by the shift in the digital era. Indeed, technology has been part of every business. However, it’s only recently that digitalization has become critical in business continuity.
Some digital connections are expected, such as from your clients to their customers. This connection could mean a website or any online platform that caters to customer inquiries. As a result, your clients are at risk of cybersecurity liability.
Conclusion
Post pandemic, and with several months remaining for 2021, your clients should know the importance of builders’ risk insurance in these construction trends. An increase in construction, whether residential or non-residential, would increase the demand for this specific insurance.
About Snyder Specialty
Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.
