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CONSTRUCTION RISKS BECOMING HARDER TO PLACE If the last two years have shown us anything, it is that supply chain disruption will be only one hurdle in insuring new and remodel construction contractors. The demand for housing, whether single-family residences or apartments, continues to increase. Construction trends in 2022 According to Forbes in a recent article on housing trends, most housing gurus predict “the market to remain strong for a while" for several reasons. These include the following.
Challenges placing construction insurance In a recent online seminar on property markets, wholesale brokers discussed the recent insurance marketplace, The pandemic proved that the government, and customers, deemed tradespeople of all stripes “essential workers," and most continued to work steadily throughout this persistent pandemic. While the presenting brokers described the market as “in transition," 2020 saw problems with coverage as the insurance market adjusted. Lower capacity, stricter policy conditions and provisions, and other issues surfaced that insurance agents had to adapt to. These changes included the following.
• A younger demographic. • Now half the U.S. population, Millennials and Gen Z comprise almost a third of • Inflation on construction products and now, today's real estate market. transportation costs • Low housing supply is fueling demand, and with • Nuclear verdicts, especially in commercial fleet it, increasing home prices. exposures • Due to stricter loan requirements, experts do • Higher cost of goods, which resulted in higher not expect a high number of mortgage loan claims payouts and an “overall poor claims defaults as the U.S. experienced in 2008's experience," much of it due to inflationary housing crash. material costs Additionally, skilled artisan and contractor trades Additionally, wildfires impacted lumber reserves, such as plumbers, electricians, and kitchen and the Texas freeze last year as I saw first-hand and bath remodelers report strong demand. last year (my husband is a plumbing contractor), As Americans age in place, upgrades such as caused practically all plumbing supplies in the accessibility improvements and adding square U.S. to head to Texas, has hit claims payouts as footage for relatives or caregivers will also repaired times and prices increased. continue to fuel the remodeling boom. 22 | AUGUST 2022 |
wisconsin INDEPENDENT AGENT
