Building Contractor Business Outlook 2022

  • 3 min read

The COVID-19 pandemic has left an indelible mark on industries worldwide, and the construction and building sector is no exception. In this blog post, we explore the multifaceted effects of the pandemic on home builders and general contractors, drawing insights from an insurance publication that sheds light on the challenges faced by construction business owners.

1. Impacts on Construction Business Owners

A report from the insurance industry reveals that a substantial 70% of construction business owners have experienced negative effects due to the disruptions caused by the pandemic. These effects range from challenges in acquiring employees to insurance-related hurdles, lockdowns, and social distancing requirements leading to temporary shutdowns of construction activities.

2. Insurance Challenges

The pandemic has posed new challenges for insurance in the construction industry. Policies for coverages, especially in areas like workmen’s compensation, faced revisions to account for COVID-19-related on-the-job injuries or sickness. Moreover, some insurers may not cover payroll-related issues, further complicating matters for businesses in the construction sector.

3. Changes in Bidding Requirements

Property owners issuing bids for construction projects now often require that construction managers incorporate protections for COVID-19-related impacts directly into their contracts. This added layer of complexity is a reflection of the evolving landscape and the need for builders to adapt to new industry norms.

4. Material Costs and Workflow Disruptions

A significant disruption arises from the drastic increase in material costs, which have more than doubled in some cases. The ripple effect includes workflow disruptions, the challenge of retaining employees, and potential difficulties in rehiring due to shifts in unemployment status. The inflated costs of materials add financial strain to construction projects.

5. Changing Insurance Policies

The uncertainty surrounding the pandemic has led to a proactive approach by construction business owners. A notable 85% of them have made changes to at least one of their insurance policies. However, 75% express ongoing concerns about having the right policies in place to adequately protect their businesses.

6. Positive Outlook for the Future

Despite the challenges faced, there is a positive outlook for the upcoming year. The construction industry anticipates navigating these hurdles, adapting to changes, and finding innovative solutions to sustain and grow their businesses in the post-pandemic era.

7. Insurance Agents as Guides

This period of change presents an opportunity for insurance agents specializing in construction. They can play a pivotal role in guiding business owners through the evolving landscape, helping them understand new risks, such as cyber liability and environmental concerns. As the industry adapts to new norms, insurance agents can provide crucial counsel to navigate the complexities of insurance coverage and industry shifts.

The building industry, while disrupted by the pandemic and its aftermath, is resilient and adaptable. Businesses and insurance professionals alike are rising to the occasion, finding ways to thrive in the face of uncertainty and embracing the changes that will define the future of construction and building.

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