There’s been some recent good news in the construction market. As a broker who works exclusively with the construction industry, I noticed recently that most of my clients anticipate their payroll to grow this year. After 3-4 years of a brutally tough climate for contractor’s this is great news. I ran across an article in the November issue of Insurance Journal magazine that was upbeat as well…..below are some excerpts.
When it comes to home building or infrastructure projects, the picture is not as bright. But even there, some brokers see things improving, depending on where in the country they are.
While few are predicting a construction boom, some think there is enough momentum building now that 2013 will be better than 2012. Maybe not a lot better, but better.
Of course, there is also some wishful thinking out there.
Mark Reagan, Marsh’s global construction practice leader who is based in Morristown, N.J., sees the three drivers for construction as education, healthcare, and energy as the market heads into 2013.
“When you look at the need around infrastructure, healthcare, education, and medical research — I don’t see that there’s any doubt that the demand is building,” he says. He predicts that by the end of the second quarter 2013, and going into the third and fourth quarters, construction activity will increase.
“I think construction has been bouncing along the bottom, but it will start to come up,” he says.
There has been momentum in big city construction project planning — a sign that growth throughout the entire construction industry is to come, according to Reagan.
“There is a lot of work — and there has been through the year — a fairly good uptick in the amount of work in the offices of engineers and architects, which is always the precursor,” Reagan says. If architects and engineers don’t have work, then there won’t be construction work going forward, he says. But that hasn’t been the case for 2012, and Reagan expects that upward trend to continue in 2013.
The article closes with these comments to construction contractors.
That’s a change from the past few years, Murphy said, when return premium audits were more the norm. Even though the backlog on construction works seems to be dwindling, clients are increasingly optimistic about new projects, he says.
One California broker even likes the housing market.
“Housing is showing some improvement due to reduced inventory, more available financing, historically low interest rates and some return of consumer confidence,” says James Knoop, senior vice president of Lockton Construction Services who is based in Irvine, Calif.
“Overall, the construction industry is improving and the insurance market remains fairly stable with ample capacity that has helped keep rates mostly in check,” Knoop says.
As a broker who specializes in working with California contractors, I’m hopeful that your contracting business will benefit from the stronger construction market that appears to be coming.