Rising Demand and High-Risk Trends Reshape the Construction Industry

As the construction sector experiences a resurgence to pre-pandemic levels, driven by lower interest rates and robust demand in both residential and commercial sectors, spending has notably increased, with a reported 11.3% year-on-year rise as of November 2023. This growth, however, brings heightened risks, especially in construction defect claims, which are becoming more prevalent due to factors like economic shifts and legislative impacts, notably from the 2021 infrastructure bill.

John Posa of Nationwide E&S Brokerage Construction notes a significant shift in the insurance market as carriers reassess their involvement due to rising settlement costs and jury awards. To navigate these challenges, Posa emphasizes the importance of using advanced analytics for risk assessment and maintaining strong insurer-reinsurer relationships to ensure comprehensive coverage and effective claims management.