Construction business owners experienced declines in their revenues, project completions, new bids and workforce, as the pandemic took hold in 2020. In fact, 7-in-10 construction business owners were negatively affected by COVID-19, according to research from insurer Nationwide.
The New Agent Authority survey found that construction business owners expect to face continued challenges yet most owners are optimistic about the upcoming peak season and their business's ability to get back on track.
At the same time, the pandemic has highlighted the need for increased planning, as more than 1-in-5 business owners lacked plans to help their businesses operate through economic uncertainty.
According to Nationwide, insurance agents can increase their value to business owners now and position themselves for long-term growth.
"COVID-19's impacts have brought new and existing challenges to the forefront for many construction business owners," said Linda Stueber, Nationwide's senior vice president of Middle Market Commercial Lines. "As the industry recovers, agents can grow their influence by not only counseling clients on their protection needs for changing operations, but also by sharing expertise to help them run their businesses more effectively."
Most construction business owners said they made changes to account for the pandemic's impacts. Nearly 90% changed their operations for business continuity or increased efficiency. In many cases, the tightening labor market has also forced them to relax screening criteria for new hires. In fact, 70% of business owners said they have, will or may relax new hire screening criteria and drug testing practices to account for a lack of qualified candidates.
Also, 85% of construction business owners said they have changed at least one of their insurance policies, and three-quarters are worried about having the right policies in place to protect their business.
With the anticipated uptick in business over the next year, Stueber believes construction-focused independent agents have an opportunity to counsel business owners through operational changes and new exposures. Even more, assisting owners to protect against increased cyber or COVID- related liability exposures will be important.
The survey results uncovered that construction owners trust their insurance agents. Many reported leaning on their agents to guide them through the challenging market conditions:
- 89% of construction owners trust their insurance agent's guidance and feel they can build a relationship over time.
- 87% said their agent regularly checks in to make sure their policy is adequate for their needs.
- Half of business owners engaged their agents over the last 12 months to: o Discuss or review their coverage (54%) o Create a business plan to address COVID-19's economic impacts (51%) o
- Improve their business's safety and loss control efforts (50%)
"Construction owners are looking to build long-term relationships with the agents who serve their businesses," said Stueber. "By opening a dialogue now to hear their client's business needs and share expertise and counsel in the short-term, agents can build stronger long-term relationships to be prepared to implement that counsel when construction owners are confident their business will improve."
Business owners shared strong interest in receiving more resources and guidance from their agents, including:
- Regular policy reviews (46%)
- Information on the latest trends in their industry (43%)
- Updates on cyberthreats and cybersecurity measures (36%)
Nationwide commissioned Edelman Intelligence to conduct the online survey among a sample of 200 U.S. middle market construction business owners between January 5 – January 14. Middle market construction business owner was defined as a sole or part owner of a construction company with either 25-500 employees or $10M-$500M in revenue or 20+ fleet vehicles.