Construction Boom Brings New Work Comp Risks for Contractors and Their Employees

Topics: Workers' Compensation Small Business Advice Loss Control

Across America, saws are buzzing, hammers are pounding and cranes are hoisting, all signs the construction industry is booming. So much so that the current pool of talent cannot meet the growing demand. Just last year, employers were looking to fill an average of nearly 225,000 construction jobs each month, according to the Bureau of Labor Statistics.

Known historically as a specialized and complex risk class to underwrite, the construction industry presents an array of traditional and emerging risks for contractors and the construction firms that employ them. (Read our post on our workers’ comp appetite for contractors.)

Caution: Workplace Hazards Ahead

From slips and falls to failing equipment to airborne fibers, there is no shortage of risks at a construction site. Add an influx of new, inexperienced workers, along with emerging technologies, and the chances of a tradesman – or woman – filing a workers’ comp claim are even greater. Below are six very real risks facing the construction industry today:

1. An Aging Workforce – According to the Bureau of Labor Statistics, the median age of an employee in the construction industry is 42.5 years. Unlike other industries that tend to get younger over time, the construction industry continues to age as younger workers gravitate away from the trades. While aging workers have experience and skill level on their side, older workers across all occupations are more prone to injuries, including fatal ones. In 2017, U.S. workers between the ages of 55 and 64 were involved in more fatal accidents than workers from any other age group, per the Bureau of Labor Statistics.

2. Labor Shortage – The 2008 recession resulted in a costly exodus from the construction industry. Unsure about the future of the industry, workers in an array of trades – from carpentry to masonry – retired or switched fields. A recent Associated General Contractors of America survey revealed that 78 percent of construction firms are having trouble finding qualified workers. Struggling to staff up, many construction firms are hiring employees with little or no experience in the field. With underdeveloped skill sets and minimal experience, these newcomers are usually less productive and have a greater risk of injury, as they lack the familiarity to be able to identify hazards on the jobsite.

3. A Growing Female Workforce – Assuming roles ranging from welder to equipment operator, more women are working in the construction industry than ever before. Unfortunately, personal protective equipment (PPE) manufacturers traditionally have had a one-size-fits-all mindset, putting female workers at a distinct disadvantage. Without well-fitting protective glasses, flame-resistant clothing and safety vests and harnesses, female employees are at greater risk for injury than their properly outfitted male counterparts. Realizing the risks women face, the Occupational Safety and Health Administration (OSHA) and the National Association of Women in Construction have joined forces to promote safe and healthful working conditions for women across the industry. Active participants in the OSHA Alliance Program, the two organizations target hazards such as the selection of PPE, workplace intimidation and violence, and jobsite sanitation.

4. Overextension – When there’s more work than available workers, contractors may find themselves taking on projects they do not have the capacity – or expertise – to handle. The decision to do more with less can be a catalyst for accidents and other risks. However, contractors aren’t the only ones affected by the building boom. Asked to assess more large-scale, billion-dollar projects than ever, construction underwriters have their own set of challenges. Projects like these can tie up capital and commitments for longer periods, making it more difficult to assess risk.

5. COI-related Expenses – Construction projects are built on a foundation of relationships between stakeholders including investors, lenders, builders, suppliers and contractors. A key component of every successful general contractor-subcontractor relationship is responsibility, which a certificate of insurance (COI) can demonstrate. Providing evidence of coverage, a COI will specify the coverage types and liability limits of a subcontractor’s policy. A primary or general contractor that doesn’t require subcontractors to provide one could be held liable for a claim from an employee who isn’t theirs. Additionally, without proper COI tracking, a primary or general contractor could run the risk of having to pay premium at a policy audit for work the subcontractor had done.

6. New Technology – Designed to enhance jobsite efficiency and worker safety, wearable technology – smart helmets with fall impact detection, smart vests with GPS capabilities and smart glasses that can record videos and receive off-site instructions – are vulnerable to data breaches. Moreover, connected devices like these could distract the workers wearing them or malfunction, resulting in serious or even fatal injuries.

Building a Successful Workers' Compensation Program

Considering the surge in employment and evolving risks, it’s paramount that the pros on the job – from artisan contractors to general contractors – are equipped with workers’ compensation coverage suited to their unique risk exposures.

A strong workers’ compensation program is rooted in sound safety practices. To lower the likelihood of workplace injuries, construction pros and their insurers must work together to prepare their employees for the risks they could encounter on the job. The best place to start is with a comprehensive loss control program. A key part of risk management, a loss control team can identify specific hazards and offer solutions specifically designed to fit the needs of a construction operation.

AmTrust policyholders have access to an extensive online collection of loss control resources, from industry-specific training videos and educational materials to links to free safety apps.

Workers' Comp Coverage That Works For Everyone

As the nation’s fourth largest workers’ compensation insurance carrier, AmTrust protects businesses representing more than 350 classes. A Fortune 500 company with an A- (“Excellent”) rating from A.M. Best, AmTrust has the resources and experience to create a customized coverage plan for every customer. Competitive rates, attentive claims management and flexible payment options, including Pay-As-You-Owe, are just a few of the reasons artisan contractors and thousands of other pros have partnered with AmTrust for their work comp coverage needs.

This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact with your local RSM for more information.

Time Zones