After a mighty recovery after the Great Recession, the U.S. construction industry is finally beginning to slow down. Even before the coronavirus pandemic, in 2020, the value of U.S. construction starts was projected to slip to $776 billion, a decline of 4% from 2019’s estimated level of activity, according to 2020 Dodge Construction Outlook.

Meanwhile, the dollar value of single-family housing starts will be down 3% in 2020, and the number of units will also lose 5%, falling to 765,000, according to the report, which also expects multifamily construction starts to drop 13% in dollars and 15% in units. Moreover, these trends are also set to be exacerbated by the economic impact posed by the coronavirus pandemic.

As construction slows, capacity in the builders risk market is tightening and rates in certain areas are on the uptick. In an increasingly tough market that could only get tougher, independent agents should be thinking about how to provide more value to win a dwindling number of business clients—many of whom will be paying more and more for coverage.

“Builders risk is an old-school insurance product that even the industry doesn’t seem to understand,” says Tyler Van Spanje, CUO, Vindati. “The rates are too high, the product is confusing, and it’s not at all customer-friendly.”

However, one thing that will never go out of style when it comes to builders risk is communication. “Builders risk policies tend to be placed at the very last minute,” explains Matt McManus, AVP of inland marine at Acadia insurance. “It's critical to sustain early and constant communication with the client and the carrier throughout the project.”

“These projects can change and very often do,” McManus continues. “Constant communication can lead to an agent enhancing their role as the risk management advisor and secure more appropriate coverages and pricing.”

On the insurance side, job site security is a key area where counsel from an independent agent can prove invaluable. “Currently there are solutions available today that really would represent a small fraction of the overall cost of a job and advising clients to pursue these security systems can pay dividends in preventing and mitigating claims activity,” McManus adds.

Additionally, “as the gig economy continues to expand into all types of industries, small business owners are finding more and more need to cover their business personal property while away from their premises,” Van Spanje says. “Whether the client is a traditional installation contractor who has more specialized equipment than a contractor’s equipment policy will cover, or a project site inspector with a high-value 3D camera system, there is a need for mobile property coverage.”

To prospect for business, “agents should collaborate with community networks and trade groups, such as their local home builders association or the chamber of commerce,” says Mary Stiglic, marketing manager, US Assure. “Establishing relationships with influencers like local financial institutions, hard money lenders and realtors is certainly a good start as well.”

Once agents have their foot in the door, they can begin to become the trusted adviser. Agents can “add value by reviewing the construction contract and comparing it to the coverage offered in the builders risk policy,” Stiglic says. “You should also evaluate the coverage forms of the providers you’re assessing to ensure you secure the best available policy for your client’s exposure.”

While agents tend to only insure projects under construction, they often overlook opportunities with the tradesman who also perform jobsite tasks, explains Alan Ferguson, president, US Assure.

“Trade work and materials are covered at the scheduled project site, but who is covering the tradesman while materials are being delivered to the jobsite in their vehicle or storing them off-site? Installation floaters are easy to acquire in the marketplace and are normally cheaper than the standard builders risk policy,” Ferguson says. “The most attractive policy for the tradesman is the blanket or reporting form because it allows multiple installations at different sites to be covered under one policy.”

One of the most important things that an agent can do is “ask questions and read the construction contract—even if it’s a simple project,” McManus says. “Don’t assume you know the details of the construction. That two-story expansion may seem straightforward, but you could later learn that the ground floor was being raised in order to build the new addition on the first floor.”

Will Jones is IA managing editor.