{"id":9254,"date":"2023-09-18T06:22:00","date_gmt":"2023-09-18T12:22:00","guid":{"rendered":"https:\/\/www.shieldagency.com\/blog\/?p=9254"},"modified":"2025-01-23T10:58:02","modified_gmt":"2025-01-23T16:58:02","slug":"social-inflation-3-factors-driving-a-hardening-market-in-the-construction-sector","status":"publish","type":"post","link":"https:\/\/www.shieldagency.com\/blog\/social-inflation-3-factors-driving-a-hardening-market-in-the-construction-sector\/","title":{"rendered":"Social Inflation: 3 factors driving a hardening market in the construction sector"},"content":{"rendered":"\n

Shield Insurance Blog<\/a> | Social Inflation | Start A Quote Today<\/a><\/p>\n\n\n\n

1. Social inflation leads to increasing liability claim costs<\/h3>\n\n\n\n

Though workplace injury has always been a major cost driver for the construction industry, social and medical inflation are leading to larger liability claims payouts, whether as a result of a third-party injuries due to vehicle accidents or other worksite incidents. According to Ironshore\u2019s Britt Sellers: \u201c\u2026juries are taking sympathy with the plaintiffs across all liability lines, alleging that \u2018the general contractor should have done this or could have done that to prevent an injury.\u2019\u201d<\/p>\n\n\n\n

Because of social inflation and the rising cost of medical treatment, the trend toward \u201cnuclear\u201d jury verdicts \u2013 where payouts surpass $10 million \u2013 has been on the rise since 2015. And this is forcing change in the insurance market. Beauvais reports, \u201cBack in 2016, $25 million was the nominal limit deployment that we saw on a lead umbrella, but by 2019, we saw that get pulled back to somewhere between $10 million and $15 million. Now we\u2019re seeing the limit pulled as low as $5 million in the lead umbrella space.\u201d For companies seeking more coverage, the market is limited \u2013 and prices are much higher.<\/p>\n\n\n\n

2. Cost-saving measures lead to construction defects<\/h3>\n\n\n\n

Another factor influencing the hard P&C market are \u201cvalue engineering claims.\u201d Though value engineering is beneficial<\/a> in the right hands, at times, some cost-saving measures can lead to failure points \u2013 and those failures come at a high cost.<\/p>\n\n\n\n

In response to questions about the frequency of value engineering claims, Sellers notes, \u201cOur claims group has identified two factors that are resulting in greater frequency and severity of design-related claims. The first is when architectural plans or project specifications lack sufficient detail in some respect. The second factor involves inadequate communication between design professionals and general contractors and subcontractors.\u201d<\/p>\n\n\n\n

Lack of communication and inadequate project specifications can lead contractors to opt for alternative methods that cut costs. But when those methods fail, the contractor is liable \u2013 and potentially expensive claims may follow.<\/p>\n\n\n\n

3. Design\/build contracts shift liability<\/h3>\n\n\n\n

Click here for the rest of the story…<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Because of social inflation and the rising cost of medical treatment, the trend toward \u201cnuclear\u201d jury verdicts \u2013 where payouts surpass $10 million \u2013 has been on the rise since 2015.<\/p>\n","protected":false},"author":2,"featured_media":14682,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,1,2],"tags":[15,1110,1108,1107,1111,1109],"class_list":["post-9254","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-blog","category-insurance","category-shield-blog","tag-business","tag-construction-defects","tag-construction-sector","tag-hardening-market","tag-shifting-liability","tag-social-inflation"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/posts\/9254","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/comments?post=9254"}],"version-history":[{"count":5,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/posts\/9254\/revisions"}],"predecessor-version":[{"id":14683,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/posts\/9254\/revisions\/14683"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/media\/14682"}],"wp:attachment":[{"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/media?parent=9254"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/categories?post=9254"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.shieldagency.com\/blog\/wp-json\/wp\/v2\/tags?post=9254"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}