Background:
The roofing industry market is over $50B in the U.S. and growing. With growth rates over the past five years averaging 2.2%, projections for the next seven years is a healthy compound annual growth rate (CAGR) of 4.6%. Impact of the global pandemic has created short-term unevenness in the industry growth, but the outlook for the future presents strong opportunity for roofing contractors to grow their business and profits in coming years.
With strong opportunity ahead, it is critical that you understand the risks to your business, solutions to mitigate losses, and the current insurance market in order to plan wisely so you can grow profits and protect your business.
September 2020
As we enter the fourth quarter of 2020, the Insurance market continues to see rising prices and less capacity in most areas. This is being driven by several factors that were in place prior to COVID-19. COVID-19 has only exacerbated the issues. Roofing contractors will not be immune to these pricing increases and should prepare their budgets accordingly as we move into 2021. Below we will outline highlights of the marketplace by line of coverage.
General Liability
Construction in general is seeing prices rise as underwriters have limited capacity and are looking at unknown potential losses from Covid-19. Roofers are especially being scrutinized as one of the higher hazard construction classes of business. Roofing contractors will see rate increases in the range of 3% -9% for the best operations and 10% – 25% for operations with any significant claim activity.
Auto
Commercial automobile insurance continues to suffer from poor loss ratios across the board. Frequency and severity of losses have been increasing steadily for the past seven years. Contributing negatively are the high jury awards, which have become common place in the United States. The number of jury awards in the auto liability claims over $10M have quadrupled in the past five years. Roofing contractors in California are seeing several markets leave the class of business, putting additional upward pressure on rates (both auto and excess coverage). For roofing contractors, auto rates are increasing by 8% – 30%.
Umbrella, Excess
As noted above, high jury awards, poor loss ratios and limited capacity is causing higher rates for all risks, but is more acute for the roofing industry because fewer carriers offer coverage. When they do offer coverage, they only offer a fraction of the limit offered in the past and typically require higher limits in the primary coverage. As a result, we’re seeing many roofing contractors lower their excess limits. Roofing contractors are experiencing excess price increases in the range of 15% – 50% on average.
Workers’ Compensation
The market continues to be relatively stable. Well-run operations demonstrating strong safety practices and experiencing low losses benefit from continued competitive pricing. Most experts believe we are at the bottom of soft marketing pricing. With the impact of the pandemic, increasing medical costs and many consecutive years of sustained low rates, it is anticipated that rate levels will begin to rise in the next 12-18 months.
Property
Rates have been on the rise for several years; that trend continues in 2020 and is projected into 2021. Losses due to fires, catastrophes and increases in non-cat weather across the country are driving double digit increases, and more restrictions on capacity and limits available.
Conclusion
As a roofing contractor, you could see significant insurance price increases in the coming year, with fewer options available. What can you do to have a meaningful impact on these increases? Change your risk profile so you look different than your competitors to the insurance marketplace. How can you do this?
- Update safety plans, including COVID-19 procedures, customized for you
- Use analytics and data to identify opportunities for risk reduction and pricing improvements
- Partner with an Insurance Broker who has a proven track record of changing risk profiles and lowering cost for its customers
EPIC places more than $1B in construction insurance premiums. We specialize in the roofing industry with a proven process to lower your cost with specialized and focused services. In this time of rising prices and a limited insurance marketplace, our market leverage is an advantage to you. This is not the time to renew with the same old broker. Find out what it’s like to get year-round service that improves your bottom line.
