One of the most common unknown expenses for contractors is the cost of insurance. Profit margins can be impacted by volatile premiums for general liability (GL), workers’ compensation, umbrella/excess liability, and other types of insurance.
An “Insurance Marketplace Realities 2023″ survey reported that rates for contractor insurance across all lines of coverage are improving. Yet the report notes: “Certain high-hazard exposures and contractors with challenging risk profiles will continue to experience rate increases, but the rate of these increases will be tempered as the market improves.”
The following are additional findings from the report:
• An influx of capital into the market and increased competition for quality risks is leading to more flexibility in pricing and coverage options.
• While increased competition might yield better renewal results, incumbent insurers are a better option due to their familiarity with a contractor’s operations. Incumbents often have a level of confidence that allows for more flexibility.
• Renewal rate increases are declining across all casualty lines after peaking in the third quarter of 2020. Umbrella and excess liability lines are the most stable.
• Rising interest rates will potentially play only a minor role in short-term changes to underwriting metrics.
• Increased competition among insurers for best-in-class risks is resulting in renewal decreases for some contractors.
• Supply chain disruptions are forcing some contractors to use less familiar suppliers and materials. Contractors should perform careful due diligence on these suppliers and materials to avoid circumstances that could lead to GL claims.
• Rising wages due to persistent labor shortages could result in higher GL insurance premiums because wages are a primary exposure base for GL premium ratings.
We’re eager and available to help you understand how insurance fits into your company’s financial picture. Give us a call.