Five Key Trends Impacting Insurance and Risk Management
Gallagher is one of the world’s largest insurance brokerage, risk management and consulting firms. As a community insurance broker and trusted consultant, the company helps people and businesses move forward with confidence. Gallagher’s dedicated construction team provides risk management solutions to contractors that extend beyond traditional exposures to protect your business. They work with agents to keep abreast of current conditions and trends, while trying to anticipate future risks.
Gallagher’s knowledgeable in-house team of experts help clients identify and mitigate risks that are under impact from these five areas of particular concern:
1. Showcase flexibility when warranted.
Starting in December, the EU’s sixth round of Russian sanctions will prohibit the import of about two-thirds of Europe’s current oil. Because this oil is not otherwise available on the market, Gallagher predicts major shortages in European production of products using oil and gas inputs (e.g. chemicals, fertilizer and plastics), together with major logistical challenges in moving goods by truck. As such, contractors using European-sourced equipment should immediately be looking for alternative suppliers.
2. Drought induced supply shortages.
The current drought in Europe, central China and the western United States will impact production of products with water-intensive manufacturing products. These include microchips (which have already been in short supply), paints and coatings, textiles and certain chemicals (alkalis, chlorine and industrial gases). Compounding sanctions-related shortages, the European drought is also creating logistical problems by reducing boat and barge capacity.
3. Drought induced power shortages.
Many western states are dependent on hydroelectric power, but electricity supply is falling with water levels, and may stop altogether if water levels fall too low. Hoover Dam used to provide enough power for one million homes, but falling water levels in Lake Mead have caused a 33% decrease in power production as of May 2022. If the water levels fall another 90 feet, it will not be able to produce any power. Thermal plants using steam turbines also use large quantities of water, and drought may affect their power production.
4. Company data and cyber liabilities.
Construction projects of any size run on data, and if a hacker installs ransomware on your system, your project could grind to an almost immediate stop. To address labor shortages, the industry is also turning to robot technology for things like laying rebar, tying the rebar together and 3-D concrete printers. Each of these systems depends on computer controls, often controlled remotely. A hacker penetrating your system could seize control of the robots, causing immense harm. To protect yourself, ensure that all employees are fully trained on cybersecurity issues, your software is kept up to date with the latest security patches and you have appropriate cyber-security insurance.
5. Safety technology.
Insurers are pushing contractors to use more advanced safety technology, including wearables that can sound alarms to notify workers of restricted or hazardous areas, log interactions between workers for contact tracing and job hazard analysis, warn supervisors of unsafe equipment usage and alert managers to possible injuries to expedite an emergency response. Use of such equipment can also save you money through reduced Experience Modification Rates (EMR) from fewer accidents and greater efficiency to better monitoring of worker activities.