The construction industry has recently encountered volatility due to several trends. As such trends impact the success and public perception of a business, monitoring the latest sector developments and appropriately adjusting operations and risk management practices to respond to industry shifts is crucial. Changes in the construction industry can affect several aspects of an operation, including profitability and attraction and retention efforts, and the following are areas for construction industry businesses to watch and address in 2024.
Rising Litigation Costs Due to Nuclear Verdicts
Nuclear verdicts refer to particularly high jury awards—generally, those eclipsing $10 million—and such verdicts have become increasingly common in the past decade. Several factors have contributed to the increase of these verdicts, including rising litigation funding, desensitization to large verdicts, changes in the legal environment and shifting public sentiment toward businesses. Nuclear verdicts continue to carry substantial consequences for construction businesses of all sizes, resulting in lasting reputational harm, posing underinsurance concerns and creating financial difficulties. That’s why it’s crucial for businesses to understand how to prevent them. Strategies to reduce the likelihood of these verdicts include promoting and adhering to high safety standards, conducting regular safety education and training, properly vetting potential employees, providing ongoing supervision, and utilizing technology such as telematics and dash cameras to promote safe driving.
Labor Shortages
Labor shortages have been an issue for the past few years, and construction industry businesses can combat this trend by investing in measures to attract and retain qualified employees. Such strategies may include increasing outreach efforts at community events, leveraging upskilling and reskilling initiatives, providing comprehensive and ongoing safety training to workers of all experience levels, offering competitive wages and benefits, and attempting to bring employees who recently left the industry back to work through various incentives. It may also be beneficial for construction companies to explore underrepresented demographics to increase their talent pool, hire talent recruitment agencies to expand their searches and recruit workers with construction-ready skills from closely related sectors. Building and maintaining a positive company culture can also help businesses attract and retain employees.
Increased Sustainability Efforts
Consumers and regulators have been placing additional pressure on businesses to ensure eco-friendly practices. Construction businesses can improve sustainability efforts in several ways, such as using green products, improving buildings’ energy efficiency and utilizing carbon-reducing practices, such as building with modular construction, electrifying fleets, going paperless and transitioning to sustainable energy sources. Businesses can balance the added expenses of these efforts against the savings these actions provide (e.g., through higher efficiency and reduced waste) and the reputational value garnered from demonstrating a commitment to sustainability.
Technological Advancements
Businesses of all sizes in the construction industry have utilized advanced technology to automate certain construction tasks; improve efficiency, productivity and safety; and reduce waste and expenses. Innovations such as 3D printing, virtual and augmented reality, robotics, wearable safety sensors, GPS, drones, dash cameras, self-driving vehicles, telematics and the Internet of Things have been increasingly used to accomplish these goals.
Additionally, construction industry businesses have leveraged generative artificial intelligence (AI) to create optimal plans, design more efficient buildings and enhance risk management programs through automated quality assurance. AI can also assist businesses in swiftly responding to client requests and questions. Despite these benefits, technology use can also lead to elevated cyber exposure. This means it’s imperative for construction industry businesses to review their digital risks and adjust as needed to mitigate possible cyber incidents. Companies should also consider securing dedicated cyber insurance to cover potential incidents.
Be Sure
Contact the Construction Insurance experts at Deeley Insurance Group for additional industry-specific guidance. Call or text 410-213-5600.
