The construction industry is facing a major shortage of labor, and this trend isn’t going away any time soon. In order for construction companies of any specialization – from roadwork and excavation to home building – to ensure that projects get completed safely, on time, and under budget, business owners need to get the most out of their employees’ time, while incentivizing new workers to join them.
4 Ways Excavation and Paving Contractors Can Stay Busy (and Protected!) In the Winter Months
While winter months may be an “off-season” for excavation companies and contractors, there are several ways to keep some revenue flowing and stay busy. From winterizing equipment to catching up on paperwork, here are four ways to stay busy during the winter – and get your business ready for spring.
1. Winterize Equipment That Isn’t in Use
Contractors must take extra care to keep tractors and other heavy equipment well-maintained and in proper working order. Equipment that breaks down on the job can create unnecessary risks.
Use this list to make sure you are properly winterizing your equipment:
- Inspect lights
- Inspect and replace windshield wipers
- Check fluid levels
- Test the temperature of the heater
- Lubricate the engine
- Inspect glass and mirrors for chips and breaks
- Test the brakes
- Greases hinges and joints
- Inspect the housings for dents or damage
Encourage employees to keep equipment indoors whenever possible when temperatures drop below freezing and be sure to clear equipment from ice and snow.
2. Decrease Risk When Working on Winter Construction Projects
While construction projects are in full swing during the warmer months, work at many job sites slows down but can continue at least part of the time during the winter. Snowy and icy conditions, frozen ground, and cold winds create risks for contractors and their employees.
Require and/or provide warm protective clothing for employees such as boots with traction, helmets, gloves, and high-visibility clothing. Encourage employees to dress in layers for additional warmth.
Don’t forget that people and equipment move more slowly when it is very cold. Supervisors should allow employees extra time to get to job sites and do their work at the customer site.
Plan work around the warmest times of day and if conditions become dangerous due to extreme temperatures or snow and ice, call workers in for the day.
3. Invest in Safety Training and Improvements
For days when it is not possible to work outside, safety training programs are a good way for workers to spend time when they can’t perform their normal job duties.
Regardless of the season, unsafe conditions at work decrease efficiency and productivity. When tasks take more time than projected, it can lead to extra costs in overtime. Moreover, workers who get injured on a job site may result in a need to hire more people just to get the job done. Injuries on the job may also increase workers’ compensation costs.
When employees cannot work in the field, use that time for a few days or a week of safety training. The skills and information employees learn during the winter months can be applied all year long.
For example, employees who work outside need to protect themselves from the elements. Safety training is a good time to talk about sunburn and heatstroke prevention in the summer and hypothermia and frostbite prevention in the winter. This is also a good time to update first-aid or CPR certifications.
In addition to scheduling safety training, the colder months are a good time for contractors to make safety improvements in their processes and at their facilities by asking for input about the daily risks workers encounter on the job. Along those same lines, use downtime during the colder months to inspect facilities and/or offices for safety hazards to keep both customers and employees safe.
4. Prepare for Peak Season
For most excavating and paving companies, the pace is far less hectic when it is cold, making the winter months a prime time to review the past season and think about ways to work more safely, efficiently, and profitably.
During the winter, office personnel can catch up on paperwork, double-check their accounting, gather documents for tax preparation, and ensure your contracts are clear and specific (or update them if not). You also have the opportunity to deep clean office and storage areas during downtime.
Finally, slower periods allow time to rethink how to restructure processes and procedures, so everyone is working as safely and efficiently as possible. By implementing changes or improving existing processes, all employees will be able to acclimate to them before things get busy again.
Getting the Right Insurance Protection During Winter
Whether you choose to use your time in the winter by scaling down or engaging in other services, it is important to have the right commercial insurance policies in place. As seasons change, you may need to review worker classifications carefully as they change roles.
Depending on the type of operations, you may need a policy that includes things such as:
- General liability
- Property
- BOP
- Workers’ compensation
- Commercial auto
- Employment practices liability
- Directors and Officers
- Boiler and machinery
- Builder’s risk
- Business interruption
- Crime insurance
- Fidelity bonds
At NIP Group, we can help protect your business all year long. Contact us or reach out to your broker today to learn more.
Why the Construction Industry is Facing a Labor Shortage and 5 Tips to Lessen Its Impact
The construction labor shortage is being widely felt across the industry, especially as business has started to boom. Due to the fallout of the pandemic and other macroeconomic factors, construction companies have been unable to find enough workers to complete projects on time.
This workforce shortage will likely continue affecting organizations in the short-to-medium term, leading to many potential issues, including:
- Safety Concerns: Without a steady supply of trained or senior-level workers, many companies may have to depend on employees with fewer skills and less experience, putting the business and themselves at a higher risk for injury or equipment misuse.
- Lower Efficiency: Workers with less experience may work slower as they learn the ropes. This can also cause project delays and damage the company’s long-term client relationships.
- Higher Labor Costs: With such a low supply of labor and a high demand for laborers, pay rates and benefits packages have been increasing for construction workers. According to the Associated General Contractors of America, 73% of construction firms of all types have increased their pay rates in the last year to deal with shortages.
Why is there a Labor Shortage in the First Place?
The current labor shortage in the construction industry is due to myriad factors that have created a perfect storm, beginning with the 2008 recession, which saw 600,000 skilled construction workers leave their jobs in that year alone. Economic reasons by themselves aren’t the only strain on the construction industry. Among the other pressures that have left this sector understaffed include a change in workforce demographics and the fallout of the pandemic.
Demographic Change
With a large portion of the construction workforce being baby boomers, retirement is proving to be a problem for many construction and other related industries. An estimated 29% of the construction workforce will have retired by 2026, leaving a significant gap for others to fill. The surplus of older workers retiring, combined with a decline in foreign contractors willing or able to work in the construction industry, have been major factors in the ongoing worker shortage.
The Post-Pandemic Boom (and Its Fallout)
With the worst of the economic effects of the pandemic in the past, residential homeowners and businesses are finally getting around to long-awaited renovation projects and new builds. The increase in activity has created a major boom of demand that even peak pre-pandemic levels would struggle to meet. Residential homebuilding has been complemented by a large boom in governmental spending for infrastructure, including roadworks. In 2021, the U.S. Government allocated $110 billion for new funds towards roads, bridges, and other major infrastructure contracts. The issues that this boom has caused have also been compounded by the fact that training programs were largely slowed or canceled due to pandemic-related safety issues, exacerbating the construction worker shortage.
How to Reduce the Impact of the Labor Shortage
While the labor shortage is projected to be an ongoing issue, there are a few things business owners can do to keep their workers and increase their bottom line.
1. Take Advantage of Technology
There are technology solutions available that can make workers more efficient and productive, enabling them to get more done with less. Tools such as drones, digital twins, and automated safety systems can help to both reduce the need for extra workers as well as minimize the risk of injuries that could take people off of projects for days or months at a time. Certain technologies also help you to process paperwork more quickly as well as ensure that billing processes are completed automatically.
2. Offer Higher Pay and Better Benefits
While the construction industry’s pay raises don’t match up to other industries who want to hire from the same labor pool, creating incentives can help you get the talent they need. By creating a strong incentive and labor package, you can also retain talent for longer, bypassing future labor issues and retaining young employees who may become skilled, long-term workers in the future.
Labor retention through higher pay can be vital for any construction firm. With the sector facing a turnover rate of as high as 56%, providing reasons for your employees to stick around longer can help to mitigate the impacts that are facing the wider industry. Benefits that you should be considering outside of higher pay include more generous sick and vacation leave policies as well as more flexible schedules when possible.
3. Provide Training to Incentivize New and Existing Employees
If you’re looking to attract younger talent, incentivizing your new employees with clear paths to promotion and certification can boost your retention efforts. Providing younger employees with a feeling of meaning, purpose, and opportunities for career development beyond baseline construction labor can not only gain their interest, it can engender feelings of long-term loyalty to your organization. Providing training can also help to keep your employees committed to your company. Opportunities for training used in conjunction with a strong pay and benefits package can also help boost your employee retention rate for the long-term and attract new candidates through referral or word of mouth.
4. Consider Leveraging Internships
The current labor pool for young construction professionals is low: just 11% of 18-24 year-olds believe that working in the trades can lead to a high-paying job. In order to make up for the low levels of interest from the younger generation, consider being more proactive in your hiring and advertising practices for young workers. Job fairs and internships out of high school are fantastic ways to get young people interested in the work early and start developing their skills. A huge benefit of internships is that you can quickly vet those who would be promising employees and extend them an offer or apprenticeship right out of high school or college.
5. Use Alternative Talent Pools
Instead of looking at the traditional pipeline for talent, there are also other avenues that you can explore to find skilled workers for your company. One way to gain a larger talent pool is through second-chance hiring, or hiring people with felony convictions. Many correctional facilities have classes and shops for enterprising prisoners to build their skill sets, and by giving them a second chance, you may gain a dedicated worker for life. In fact, the Second Chance Business Coalition states that 82% of managers who have hired workers with a criminal record found that they bring equal or higher value to their organizations than workers without records.
Another option that your organization could investigate is hiring veterans for your workforce. Organizations like Helmets to Hardhats help veterans and construction firms find each other for placements. Many military members have skilled training relevant to the industry already and can prove to be a huge asset to your organization.
The Landscape of Construction is Changing
This shift in demographics and labor is just beginning. Companies of all kinds must adapt to ensure that the loss of workforce combined with the rapid increase in demand for services, will not cause you to lose your competitive edge – or overlook the risks and liabilities of your rapidly changing industry. That’s why it’s more important than ever to ensure your business is covered with insurance specialized for the unique needs of your industry.
Learn more about how SitePro can help protect paving & road contractors and grading & excavation contractors.
NIP Group and California Asphalt Pavement Association Collaborate to Offer Members Exclusive Business Insurance Program
WOODBRIDGE, NJ, January 18, 2023—NIP Group, a specialized business insurance and risk management intermediary, today announced the launch of AsphaltPro in collaboration with the California Asphalt Pavement Association (CalAPA).
In California, asphalt covers about 95% of paved surfaces in the entire state and has become the pavement of choice for public and private owners because it is smooth, quiet, safe, cost-effective, and 100% recyclable. The paving industry’s work maintaining the state’s freeways, highways, streets, and parking lots is essential to California’s economy and quality of life. But the construction industry has some of the highest annual risk of any industry simply due to the complex nature of the work being performed.
With more than 30 years of experience in the industry, NIP Group understands the unique insurance coverage needs of paving businesses, and that’s why they’re trusted by CalAPA.
“We couldn’t be more thrilled to collaborate with such a respected association and bring this specialized insurance program to their members,” said Tom Doherty, SVP of Specialty Programs for NIP Group. “The paving industry has unique coverage needs and we are honored that CalAPA trusts us to protect their members’ businesses.”
AsphaltPro is a comprehensive insurance program offering coverages tailored specifically to the paving industry and competitive pricing for businesses of all sizes. It is available exclusively to CalAPA members, and the policy includes membership for new/renewing members.
“As the only statewide association in California that focuses exclusively on asphalt pavements, CalAPA is pleased to enter into this collaboration with NIP Group,” said CalAPA Immediate Past Chairman Scott Fraser. “Like CalAPA, NIP Group understands the unique challenges faced by asphalt paving companies and what it takes to succeed. This collaboration is very complementary and leverages the expertise of all parties.”
About NIP Group
NIP Group is a market-leading specialty insurance program manager that has been offering unique commercial insurance solutions and risk services for niche industries for 30+ years. Working with more than 5,500 broker partners, we help clients gain control over their costs, secure customized coverage, and create safer work environments. Learn more about our wide range of brokerage, underwriting, and risk management services at NIPGroup.com.
About CalAPA
The California Asphalt Pavement Association (CalAPA), founded in 1953, is a nonprofit trade association representing the asphalt pavement industry in California. Members of the association include asphalt producers, refiners, paving contractors, suppliers, engineering firms, testing labs, equipment manufacturing companies and others that are part of the industry. CalAPA is the only statewide construction trade association focusing exclusively on asphalt pavements. To learn more, visit calapa.net.
Infographic: The Future of Construction is Bright – Here’s What Business Owners Need to Know
It’s no secret that the construction industry has had a tough couple of years. While labor shortage is still an issue, demand is rising, which means business could be booming for those that are willing to adapt. By investing in new technology and changing recruiting and retention practices, construction companies can not only keep up, but continue to grow.
Check out the infographic below for more stats and facts around where the industry is heading and then download our report to learn more about the new technology that is changing the construction industry.
The Exciting Future of the Construction Industry in 2023
The construction industry has gone through a rough few years, causing many companies to lose out on profits or be forced to delay projects they would have otherwise started. This, when combined with grim labor statistics around the lack of new laborers entering the workforce and baby boomers hitting the age of mass retirement, has created many difficulties for organizations looking for skilled workers to complete projects. These issues have caused many construction companies to seriously reconsider the ways in which they operate.
That being said, it’s not all doom and gloom – there are plenty of reasons for optimism heading into the new year, namely the explosion of new demand that is currently springing up due to the reopening of businesses and demand for new infrastructure. The future of construction is looking bright and there are plenty of ways for business owners to not only grow but thrive in 2023.
New and Exciting Trends in the Construction Industry
The trend of increased demand for construction isn’t going away soon. In fact, the prognosis for the long-term future of construction looks great. A study done by Oxford Economics suggests construction output in North America will grow by 32% from 2020 to 2030 — presenting many exciting opportunities for construction companies. Combined with the projected growth in the U.S. housing market (a rate of 2.0% every year until 2026), the demand for new construction projects — be they residential, business, or infrastructure — will be sustainable for the foreseeable future.
Innovation in building techniques and technologies are also playing a major role in shaping the future of the construction industry. These innovations allow companies to do more with less and increase overall efficiency across the board. For example, modular construction using prefabricated parts has started trending in the industry, helping organizations save up to 30% on their costs while also shortening their project schedules. This level of cost savings is only rivaled by the growing adoption of new technologies in the construction space, from highly advanced technology like robots, to better analytics and the common drone.
Taking Advantage of New Technology is Essential For Construction Companies in 2023
New innovation in the construction technology space has allowed companies to get more work done with a lower worker count. These advancements have proven their worth for many construction companies, and many more are jumping on the bandwagon in order to retain their competitive edge. Some of the most impactful technologies that the space has seen include drones, AI, and 3D innovations.
Drones
From surveying tracts of land for a new construction site to overseeing how operations are going on the ground, drones have become a major asset and their use will only continue to grow. In fact, drones can save up to 20x the cost of traditional methods of surveying, helping companies to quickly and more cost-effectively create topographical maps with the assistance of software programs. The enhanced visibility that drones can offer ensures that this technology is here to stay.
AI/ML Technologies
Task automation by artificial intelligence (AI) has already reached a level where it’s useful for construction companies. As this digital technology grows, so too will its practical applications. AI in the future could be used to create better schedules and timelines to help businesses avoid project delays. These tools can also be used to assist in the design process, helping specialists and engineers to get a clearer picture of what needs to be done.
In fact, AI can combine with pictures taken by drones for automatic topographical mapping or modeling software in order to build out realistic digital twins. This provides a significant advantage across the board, especially for land surveying and excavation work. Combining AI/ML technologies with drones can quickly survey areas, create up-to-date maps, and make accurate readings on elevation and material volume. By adopting artificial intelligence and machine learning as a new technology, the construction sector can finally take advantage of big data in the way that many other verticals have been doing for years.
3D Printing
Once thought of as an innovation straight out of science fiction, 3D printing has found its way into the construction market and is showing tremendous signs of success for organizations. According to Grand View Research, the 3D printing construction market is poised to grow by slightly more than 100% every year all the way up to 2030. The wide uptake of this technology is due to construction companies being able to make components that can meet highly specific requirements without much material waste, and in a fraction of the time that it would normally take to create them.
3D Scanning
When excavating new ground, there are many issues that could spring up and result in higher – and unanticipated – spending. Everything from large boulders to unmarked utility wires add risk and unexpected costs to any venture. 3D scanning allows companies to survey what’s under the earth quickly and reliably so that they can identify these roadblocks before they even start, improving the quoting process and helping to make plans that keep projects on budget and on time.
These technological advancements are only a fraction of the innovations that are fundamentally changing the landscape of how we complete construction projects. Robotics, exoskeletons, and advanced data processing will also help to make projects more efficient than their traditional alternatives. As the industry grows, a higher reliance on technological solutions will be required for companies to maintain their competitive advantage.
The Future of Construction and What’s to Come
The construction industry is going through a time of transformation. These changes are ultimately positive, but will inevitably cause some growing pains in the industry. Shifting demographics and higher levels of global instability disrupting supply chains could lead to some organizations not being able to complete their projects in a timely and cost-effective manner. On top of those issues, labor shortages are playing a large role in the pressures felt by the industry today.
Labor Shortage is a Key Issue to Overcome
The construction industry is currently experiencing a labor shortage due to a combination of high demand and a dried-up talent pool. Finding enough new employees to meet the demand may be difficult for many construction companies, but taking steps to mitigate their lack of construction workers by relying more on technological solutions, offering better benefits and incentive packages, providing training and pathways to promotion, and more can help.
The Construction Industry Can Build on Its Successes
As the saying goes, pressure makes diamonds. The demand for new construction is booming and organizations that can take advantage of new technologies and new ways of managing their employees will be rewarded. Drones, 3D printing, AI/ML technologies, and advancements in industry-specific technologies such as 3D scanning can all reduce the amount of labor that companies need in order to complete their projects on time and on budget. Construction contractors of all kinds, from pavers and excavators to home builders have a huge opportunity to innovate the way they go about their projects and set themselves up for success in the future. With large amounts of money pouring into the industry, now is the time to start innovating and investing in your future as a company.
Any major construction project has a laundry list of risks and responsibilities. From ensuring that workers remain safe to completing projects on time and within budgetary constraints, companies must take steps to ensure that not only are their current projects completed on time, but that workers and the company as a whole are protected. It pays to be informed of what’s coming up in the future. Download our industry report today to learn more about the future of construction.
Protecting Your Employees and Your Business from Winter Mishaps
As we move into the winter months, snow and freezing rain come down on a regular basis, not to mention the unpredictable weather patterns that are becoming more and more common. To avoid putting you and your employees at risk of slips, falls, hypothermia, or worse, seasonal businesses must be well-prepared to stay ahead of the game when it comes to winter-related injuries and accidents.
Safety concerns are particularly high in the construction industry, even when the weather is pleasant. According to the Bureau of Labor Statistics, slightly more than one-third of the construction deaths were due to slips and falls. Nearly all deaths were attributed to falling from a high level and about 41% of all fatal slips and falls occurred within the construction industry.
It’s common for workers to get minor injuries such as cuts and bruises after a fall, but a bad fall can also result in fractured or broken bones or even death.
When one or more workers get an injury due to winter weather conditions, it can result in:
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- • Decreased productivity
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- • Increased costs to replace employees
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- • Overtime for current employees
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- • Reputational damage to your business
It is in the best interests of your business to do everything you can to create a culture of winter safety among your employees and provide the best possible working conditions during inclement weather. The best time to start your winter weather preparedness plan is before you need it. Here are some of our top tips to get your winter safety plan started.
Winter Safety Tips for Excavators
When we think about excavators, we tend to think they only work during spring, summer, and fall; however, construction projects continue all year round regardless of the weather.
If you own a paving/excavation business:
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- • Store machinery indoors to prevent snow and ice from accumulating on the surface and causing a slip hazard.
• Warm up equipment before taking it to a job site to prevent parts and equipment from locking up, and check batteries to be sure they are charged.
• Ensure workers are well-rested, as it is dangerous to operate heavy equipment when exhausted.
• Check fluids and use winter-ready lubricants for equipment.
• Use additives to the fuel to prevent it from gelling, keep fuel tanks full, and take steps to stop DEF from freezing.
• Check the air in the tires as they lose air in colder temperatures.
• Inspect equipment daily for cracks on tires, belts, and hydraulic hoses.
- • Store machinery indoors to prevent snow and ice from accumulating on the surface and causing a slip hazard.
If a mishap does happen, be sure your business is adequately protected with grading and excavating insurance.
Winter Safety Tips for Tree Trimmers
The colder months are prime time for tree trimmers for several reasons. Winter is the best time to prune trees to produce more fruit for the following year. It is easier for tree trimmers to see dead trees and branches once the leaves have fallen. Moreover, climbers have easier access to the trees, pests are dormant, and equipment can get in easier with less foliage to deal with.
If this is a busy season for you, be sure to:
- • Postpone tree trimming or cutting jobs during strong winds, intense cold, and during snowstorms.
• Require tree trimmers to wear boots that provide traction on snow and ice. Boots should have low, wide heels, and they should fit properly.
• Supply warm work gloves to keep tree trimmers’ hands warm.
• Allow workers extra time to get to job sites and complete jobs, as winter road conditions or site conditions can be more treacherous.
• Require tree trimmers to wear helmets, leg protection, face shields, and safety glasses.
• Require earmuffs or ear plugs to protect hearing.
When tree cutters get injured, specialty insurance for arborists and tree services can save your business.
Preventing Hypothermia and Frostbite
Excavators, construction workers, and other trade workers are subject to hypothermia and frostbite while working outside in freezing temperatures. Therefore, employers must take precautions to prevent cold-related injuries to workers who must work outside for long periods.
Hypothermia occurs when the body loses heat faster than it can produce. This condition causes a body’s temperature to drop below 95 degrees, which is very dangerous. The Centers for Disease Control (CDC) reports that hypothermia affects the brain, which means affected individuals may not be unable to move well or think clearly. Severe cases of hypothermia can even lead to death.
Be sure your employees are aware of the symptoms of hypothermia:
- • Exhaustion
• Shivering
• Confusion
• Memory loss
• Slurred speech
• Drowsiness
When workers are out in sub-freezing temperatures, they are also at risk of frostbite, a condition where the skin and bodily tissues become frozen. Johns Hopkins Medical Center states that frostbite can cause permanent damage or even amputation.
Excavators, tree trimmers, and other workers in the trades are most at risk of frostbite on their noses, cheeks, ears, chins, fingers, and toes. In the early stages of frostbite, workers may have pain or redness on their skin, or it may start to feel numb. The skin may turn white or grayish-yellow and may feel waxy or firm.
Help keep workers safe from frostbite by:
- • Sending workers out to job sites at the warmest times of the day.
• Postponing work during days when temperatures are extreme.
• Scaling back physical demands for workers on the coldest days.
• Adding extra workers or relief workers when necessary to get jobs done without overexposing them to extreme temperatures.
• Ensuing workers have warm liquids to drink on the job site.
• Providing a warm shelter or vehicle where workers can briefly warm up.
Treating Hypothermia and Frostbite
Your winter employee safety training program should include steps for how employees can treat hypothermia and frostbite on the job site. If you or one of your employees believe they have hypothermia and/or frostbite, take the person to a warm shelter or vehicle immediately and remove any damp clothing. Warm the chest, head, neck, and groin areas using dry blankets, towels, jackets, or clothing until the person is able to travel to the hospital.
That being said, the above is just general information and should not be considered medical advice. It’s not a substitute for a professional consultation with a qualified medical provider. If you ever have any medical concerns, call 911 or head to the hospital right away.
Final Thoughts
The construction trades carry greater safety risks than most other occupations on a good day. Certain weather conditions increase those risks exponentially, especially snowy, icy, or windy conditions.
Trade businesses risk the health and safety of their employees as well as financial and reputational risks for the company when they do not take the necessary precautions for working during the harsh winter months.
Because of increased risks during winter, excavating companies, tree service companies, and other businesses in the trades must have the proper insurance. NIP Group specializes in insuring the trades. Learn more at NIPGroup.com or contact us today to find out how the right insurance can protect business owners and their employees all year.
4.26.22 – NIP Group Reviews Labor Shortages Throughout Specialty Industries
Additional Resources:
Please download the following resources that are associated with this webinar.
Excavation Insurance: A Profitable and Often-Overlooked Niche
It is amazing to watch a construction crew begin with nothing but a stretch of land and create a beautiful commercial or residential structure on it. Before any construction begins, the excavators are hard at work preparing the land for a sturdy foundation. Construction sites do not look very exciting until the building begins, so it is common for the work of excavators to go unnoticed by passersby and insurance brokers. As part of the building trades, excavating is a high- risk business, and excavation insurance is necessary to mitigate risks.
While insurance brokers and agents focus heavily on other industries, the market for excavation insurance is a profitable and overlooked niche of the business. We will outline why pursuing the excavation market can be a lucrative opportunity for your book of business.
The Need For Construction and Excavation Insurance Is Thriving Despite the Impact of COVID
No industry was untouched by the effects of COVID, yet the excavation and construction industries have been more resilient than most other fields.
Much like other industries, the construction industry has faced shortages of materials due to supply issues, causing somewhat of a slowdown on the excavation end. Nonetheless, the building trades have adapted their working conditions, the supply chain is moving again, and excavators are still in demand.
Excavators do not have the option of working remotely, but they have the benefit of working outdoors. A single operator drives a machine, so social distancing is a non-issue. Heavy equipment operators are also accustomed to wearing masks on the job to protect them from toxins and dust.
The recent switch to a remote workforce in other industries has created a boom in residential construction. As large numbers of workers no longer need to work in city offices, significant numbers of them have opted to relocate to urban areas where the cost of living is lower. This change has slowed construction down in cities. At the same time, it has created a big surge in residential construction in the outlying areas of cities.
The proof is in the numbers, and according to Associated Builders and Contractors, unemployment rates for contractors are on the decline. Moreover, they believe new spending on the nation’s infrastructure could boost the excavation industry even more, looking as far into the future as 2026.
The Excavation Industry Offers a Broad Market Share for Excavation Insurance
Insurance professionals need to learn more about the excavation industry and the associated risks to be successful in going after the excavation market.
What do excavators do? Different construction projects require different types of excavating or grading work.
For example, some excavators solely work on bridge excavations for arch, beam, or suspension bridges which require a strong foundation. Other excavators dig channels or drainage ditches, and some dredge or strip land.
Excavating does not always entail digging. Borrow excavation requires equipment operators to add soil, sand, or gravel onto a building site to prepare the land for construction.
These are some of the other terms insurance brokers and agents should be familiar with when building a book of excavation insurance:
- Foundation excavation
- Land grading
- Trenching
- Roadway excavation
- Muck work
- Levee construction
- Soil erosion
- Foundation drilling
- Shaft drilling
- Underground excavation
Excavating companies may specialize in one type of excavating or they may contract for several different types of excavation. Regardless of what type of excavation a company performs, risks are present, and excavation insurance protects their interests.
What Does Recent Research Show About the Excavation Industry?
Growth in the construction industry is continuing to promote innovation within the excavation industry, along with a greater focus on environmental, social, and corporate governance (ESG) nationally.
Between the years of 2016-2021, the excavation industry rose 4.4%, which amounts to $80.2 billion. That figure accounts for a slight decline in the months following the outbreak of COVID.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development report an increase in residential construction building permits, housing starts, and housing completions since 2019, and the trend is continuing upward in all areas of the country.
The demand for excavation services for residential construction has been up for the last five years. Moreover, the values of residential housing have also risen since the onset of the pandemic, contributing to the rise in the residential construction market.
Excavating, digging, and trenching are required for many green innovations such as solar panels, wind turbines, deforestation, water management, and sourcing raw materials. Investors are particularly seeking out businesses vested in ESG initiatives, and these issues are increasing the demand for workers in the excavation industry.
Making the Case for Excavation Insurance
Excavating companies are acutely aware of the dangerous risks that are inherent on job sites. For that reason, the excavation industry presents an audience eager to learn more about excavation insurance.
Excavators move the earth every day. There is no way to know what dangers lie beneath the surface. The ground may not be properly compacted or the grading for water runoff could be misaligned. Trenches could collapse or heavy equipment could rupture utility lines. No matter what dangerous incidents occur, excavating business owners are on the hook for injuries, fatalities, and property damage.
Here is a brief look at the types of excavation insurance to recommend for excavators.
Commercial General Liability
A commercial general liability policy for excavators will protect excavators from claims involving bodily injury and property damage. In your discussions with excavating companies, you can build your case by sharing some of the common situations that occur on excavation sites that can cause risks with potential clients.
For example, if one of their employees fails to secure a worksite before leaving the site for several days, someone could wander onto the site, fall into a trench, and be severely injured. Emergency services may be required to get the individual out of the trench.
In this situation, the injured party could sue the excavation company and possibly be awarded a large sum for bodily injury.
As an example of a property damage claim, you could relay a scenario where a heavy equipment operator is grading the land. While excavating, the ground begins vibrating and the vibrations are being felt in a nearby residential subdivision. A property owner in that subdivision has one of their cars parked on a driveway with an incline and did not apply the emergency brake. The vibrations from the excavation caused the car to roll into the street and hit a neighbor’s car. The excavation company would be responsible for the loss and excavation insurance would cover it.
Commercial Property
Commercial property insurance would cover damage to the heavy equipment if it should get damaged due to a covered loss. This is important coverage for excavators as failed equipment could force a shutdown of a job site.
NIP Group’s teams have the necessary expertise to help excavation companies properly value equipment, operations, and property to ensure the proper amount of excavation insurance.
Advertising Injury Liability
Advertising injury occurs in all industries, especially with the massive number of people who use social media platforms every day.
Advertising injury is a result of libel or slander that injures someone else’s reputation or another business’ reputation. Often, all it takes is for an employee to joke publicly about a competitor of the company on a social media platform. The injured person could file a lawsuit against the company even if the owner was not aware the incident occurred.
An excavating company could also be accused of stealing a competitor’s idea, and that would also fall under an advertising injury claim.
Furthermore, if one of the excavating company’s ad campaigns directly points to a competitor and they lose business because of it, that could also cause an advertising injury claim. Excavation insurance would pay for the loss of the competitor’s business.
Excess Liability
Due to the high risks and large dollar amount of claims, a general liability policy is often not enough coverage for excavators. Build your book of business by offering excess liability for excavators as a second line of defense to protect your clients against liability that could destroy their business.
Final Thoughts
The grading and excavation industry is a dangerous sector, and business owners are subject to large risks and liability.
All the signs indicate the excavation industry is a ripe market for excavation insurance. NIP Group specializes in site preparation insurance coverage that caters to graders and excavators. Our team is knowledgeable in risk control, claims management, compliance, and safety resources for excavation companies.
Contact one of our excavation insurance specialists today at 866-219-4804 to learn more about how to effectively market to grading and excavation companies.
9 Good Reasons Why Your Insurance Agency Should Work With MGAs
You’d be surprised how many insurance professionals can be stumped when you ask them this simple question: “What is an MGA?”
OK, you probably do know that the acronym stands for Managing General Agents, but given that, would you know how to explain what an MGA is in the insurance distribution system or enumerate the benefits that MGAs can bring to the retail or independent insurance agency? These questions can give pause to even the most experienced agents, even those who have used the services of MGAs!
An MGA is one of two types of wholesale brokers, with the other being a Surplus Lines broker. As a wholesaler, the MGA acts as an intermediary or liaison between a retail agent and an insurance company. For a more detailed definition, we turn to the go-to insurance glossary folks at the International Risk Management Institute (IRMI). They define an MGA as:
“ … a specialized type of insurance agent/broker that, unlike traditional agents/brokers, is vested with underwriting authority from an insurer. Accordingly, MGAs perform certain functions ordinarily handled only by insurers, such as binding coverage, underwriting and pricing, appointing retail agents within a particular area, and settling claims.”
Insurance runs by the law of large numbers. It is not always economical or efficient for carriers to pursue emerging and niche markets, or to set up shop in remote areas of the country. MGAs can run with those markets and supply the deep expertise and service capabilities to manage those books of business for the insurer. MGAs can and do sell directly to insureds but working with retail agents affords exponential growth that is beneficial to both parties.
Here are 9 ways an MGA can benefit your insurance agency
- Differentiation. Most agencies are generalists, serving all comers. Some carve out a specialty or an industry focus that helps to differentiate their agency from the one down the street. Working with an MGA on niche or program business allows you to go deep, shifting your focus from a transactional all-things-to-all-people approach to more of a consultative business partner approach. Developing a reputation for sector expertise can help distinguish your agency from your competition over time.
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Momentum. Go where the action is. MGAs have been the rockstars of the insurance distribution system over recent years. According to research and analysis by the highly respected Conning, the MGA market has nearly doubled since 2012, when it first began studying the sector. In 2016 alone, MGAs’ rate of growth exceeded that of the total property and casualty market by 32 percent. More recently, even in the face of pandemic disruption, “the Managing General Agent and program market continued its upward trajectory in 2020, with premium growth outpacing the overall property-casualty market.”
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Access. Let’s face it. Most insurance agencies can only secure a limited number of carrier appointments due to volume agreements, changing appetites, and underwriting guidelines. MGAs help by broadening your agency’s access to specialty and non-standard insurers, both admittedand non-admitted, as well as to industry influencers. Most agencies would find it difficult if not impossible to secure such a broad array of markets and maintain active relationships over time.
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Growth. Grow your insurance agency’s sales and premium with a focused marketing approach and the marketing and underwriting expertise of a trusted partner. Grow your bottom line with increased efficiencies and decreased administrative costs. Improve your sales hit ratio with help in structuring and placing complex insurance risks.
- Scale. Working on niche or program business affords a more targeted focus for both your marketing and client service activities, allowing you to grow your business without a substantial increase in staff, marketing outlays, and other operational expenditures.
- Expertise. Tap into An MGA that has expert knowledge about a specific line of coverage (liability, inland marine, cyber insurance, surplus lines, etc.) or a particular niche or product they serve. For example, at NIP Group, we work with retail agencies to service specialty insurance programs for over 25 niche industries. Working with the MGA will help you deepen your knowledge of the niche sector’s challenges, exposures, and solutions, which will help build your agency authority and reputation, increase referrals, and strengthen retention.
- Technology. MGAs often offer online platforms and tools that automate and streamline processes. This allows for faster quoting and renewals, better claims processing, and numerous efficiencies in other aspects of account administration. It also brings your agency better, faster, and more actionable data analysis.
- Sales & marketing support. Many MGAs provide a vast panoply of marketing and sales tools from brochures and handouts to digital marketing. Some provide white label marketing tools so that you can build your agency brand with professional materials. (See NIP Group’s White Label Specialty Programmarketing support). Focusing on a niche will afford more targeted marketing opportunities through industry lists, trade associations, publications, industry shows, sponsorships, blogs, and social media.
- Industry-specific loss control. MGAs develop deep expertise in the risks and exposures of the programs and industry niches they serve. Agencies can tap into and use any available resources and tools that the MGA provides (such as the NIP Vault) to prevent or mitigate losses. This, in turn, allows your agency to help its client base to prevent losses from occurring in the first place, or minimizing the cost of those that do occur.
There are many other reasons why your agency should work with MGAs – in fact, more than a decade ago, Insurance Journal compiled 50 Reasons Why Retail Agents Choose Managing General Agency Partners. These thoughts from agents have held up over time.
Working with NIP Group
NIP Group’s Specialty Brokerage is a market leading wholesale brokerage operation serving 25 niche industries. We target non-standard commercial risks underwritten by admitted and non-admitted specialty carriers. Agents can leverage our expertise in placing and servicing complex risks through relationships with global insurance markets. Our philosophy of providing ingenuity in insurance has established us as one of the nation’s most respected specialized business insurance and risk management intermediaries, and a recognized leader of innovative insurance solutions. Our brokers and the businesses they serve are the central focus of everything we do at NIP Group. We are service fanatics to the core, seeking to exceed expectations. We are committed to a core philosophy of true partnerships at every level.
NIP Specialty has the expertise, efficiency, and strengthened relationships that wholesalers can bring to the process.
NIP Group is open to all independent agents – Click here to get appointed today