Where do we go from here?
Construction trends in 2024
Inflation, growing impacts of climate change, advances in safety technology and legalization of marijuana top the list.
Like every other industry, the construction industry has been — and continues to be — impacted by the macroeconomic events of recent years, including the COVID-19 pandemic. In 2024, Zurich Construction foresees that the industry will continue to see a shortage of skilled labor and higher building costs, a persistence of supply chain stressors, projects expanding in scope and complexity, and the interest in “smart” environments and sustainable building methods and materials increase.
“Zurich has observed evidence of construction cost inflation most keenly within our Builders Risk portfolio,” noted Megan Jameson, Zurich Construction Technical Director, “where even ‘vanilla’ four-walls construction project values have grown upwards of 200% over the last five-year period.”
Beyond the continuation of these critical themes, newer issues to consider as we prepare for 2024 include the increasingly dangerous and costly threats related to climate change, the quest for new technology to keep workers safe and reduce risk on worksites, and the potential impacts of legalized marijuana on the construction industry.
Growing impact of climate change
2023 is on track to become the hottest recorded year in history,¹ with the global average temperature peaking at 62.7 degrees Fahrenheit (17.08 degrees Celsius) on July 6. Those who work in outdoor temperatures are particularly susceptible to heat-related conditions like dehydration, heat exhaustion and even heat stroke, but without an official heat-related safety standard set by the Occupational Safety and Health Administration (OSHA), contractors are taking different approaches to help protect workers. Some are adding water stations or cooling misters to worksites, implementing longer and more frequent breaks, or tenting worksites for shade. One contractor doing work in Las Vegas has set shifts from 2 a.m. until 10 a.m. because that is the coolest period for outdoor work.
In addition to extreme heat and weather volatility, multiple studies have found that climate change has led to an increase in wildfire season length, frequency and burned area.² Recently, smoke from Canadian wildfires triggered air quality alerts for more than a dozen U.S. states from Montana to Vermont, with a recommendation for people to stay indoors, putting contractors in the tricky spot of having to make the call about stopping work to safeguard their workers, which could lead to project delays.
Launched in 2021, Zurich’s Weather Parametric Insurance is designed to help provide financial protection when a project is delayed due to specific severe weather triggers that occur in terms of extreme heat, cold, rain and wind, even if that weather does not cause property damage. In addition to filling a potential gap in property or Builders Risk coverage, one of the key benefits of parametric insurance is that there is no loss-adjustment process, which can expedite payments to help with cash flow.
“Zurich already has a standard weather parametric in market, but we’re working to expand that to address these human element perils,” said Alicia Pavelko, Head of Construction Innovation and Sustainability for Zurich North America. “That would be one way that we would help our contractors with that balance sheet burden.”
Technology playing a bigger role in safety
Although auto accidents have surpassed falls from heights as the largest killer and cause of catastrophic injury in Zurich’s portfolio, risks to onsite workers still exist, especially as skilled construction workers retire at a faster rate. As these seasoned workers leave the field, there may be fewer opportunities for newer workers to work alongside veteran professionals and gain valuable construction skills and insights, including safe work practices honed over decades spent on the job. Contractors focused on safety are seeing a benefit in using advanced technology like fixed-point cameras, drones and even telematic devices in vehicles — which transmit data regarding a vehicle’s exact location and the speed at which it is being driven — to help identify and address unsafe work behaviors.
“One of the largest causes of fatalities on the job is driving to and from the job”
– James Savage Head of Construction Casualty Zurich North America
“One of the largest causes of fatalities on the job is driving to and from the job as auto accidents are becoming more severe,” said James Savage, Head of Construction Casualty for Zurich North America. “We actually think that these camera systems not only help reinforce good driving behavior but help mitigate some of those potentially disastrous outcomes.”
Leveraging the power of technology, Zurich has partnered with a broker on a pilot to improve worksite safety that uses fixed-point cameras installed on worksites. At the end of each workday, footage from the day’s work is sent to a technology team and Zurich Risk Engineers, who review it to identify both safe and unsafe work practices. The findings are delivered in time for the next morning’s huddle, allowing managers to quickly address unsafe work practices and coach these employees to adopt safe work practices. Managers can also recognize workers who perform tasks safely, rewarding them with items like thermal coffee mugs and coolers.
Such programs can have added value, contributing to goodwill among crews and fostering a positive, trusting work culture. They also can have a potentially beneficial impact on insurance rates and credits for policyholders.
“We absolutely want to support good safety behavior,” said Savage. “No matter how the challenges evolve in the year ahead, getting people home safe at night will always be at the forefront of what we want to achieve together with our customers.”
“One of the largest causes of fatalities on the job is driving to and from the job”
– James Savage Head of Construction Casualty Zurich North America
“One of the largest causes of fatalities on the job is driving to and from the job as auto accidents are becoming more severe,” said James Savage, Head of Construction Casualty for Zurich North America. “We actually think that these camera systems not only help reinforce good driving behavior but help mitigate some of those potentially disastrous outcomes.”
Leveraging the power of technology, Zurich has partnered with a broker on a pilot to improve worksite safety that uses fixed-point cameras installed on worksites. At the end of each workday, footage from the day’s work is sent to a technology team and Zurich Risk Engineers, who review it to identify both safe and unsafe work practices. The findings are delivered in time for the next morning’s huddle, allowing managers to quickly address unsafe work practices and coach these employees to adopt safe work practices. Managers can also recognize workers who perform tasks safely, rewarding them with items like thermal coffee mugs and coolers.
Such programs can have added value, contributing to goodwill among crews and fostering a positive, trusting work culture. They also can have a potentially beneficial impact on insurance rates and credits for policyholders.
“We absolutely want to support good safety behavior,” said Savage. “No matter how the challenges evolve in the year ahead, getting people home safe at night will always be at the forefront of what we want to achieve together with our customers.”
Legalization of marijuana
Nearly half of Americans now live in a state where anyone at least 21 years old can legally possess and purchase medical and recreational marijuana,³ posing a real challenge for contractors who rely on traditional testing methods to enforce a zero-tolerance drug policy. Marijuana often stays in the blood for more than 30 days, long after the effects may have worn off.⁴ While federal employees can be denied employment or terminated if they test positive for marijuana metabolites, even if their use is in compliance with state law,⁵ other employers are left to their own devices to navigate this changing legal landscape while working to ensure the safety of their workers.
Recognizing the challenges faced by contractors, Zurich is in the early stages of developing a pilot that would use new technology that measures pupillary light reflex to detect impairment risk in real time, whether caused by marijuana use, alcohol use or even fatigue, something traditional testing methods are not able to detect. This technology has the capacity to confirm an individual’s identity through iris recognition and would use a baseline response measurement taken previously to help detect impairment risk.⁶
Pavelko acknowledges the changing face of risk in today’s market.
“We understand the realities of the year 2023, and so we need to be thoughtful and strategic and find innovative ways to keep people safe.”
- Patel, Kasha. “2023 is on track to be the hottest year on record.” The Washington Post. 8 August 2023.
- Westerling, Anthony LeRoy. “Increasing western U.S. Forest wildfire activity: Sensitivity to changes in the timing of spring.” Philosophical Transactions of the Royal Society B: Biological Sciences. Vol. 371. Issue 1696. 5 June 2016.
- Zhang, Mona. Demko, Paul and Fertig, Natalie. “The push for legal weed faces hostile ground in red states.” Politico. 5 July 2023.
- Duncan Group. “HR Tip: Drug testing in the age of legalized medical and recreational marijuana.” 2023.
- NORML. “Legislation for employment protections for federal workers who consume marijuana.” 2023.
- Canadian Occupational Safety. “SOBEREYE impairment monitoring platform.” Feb. 2021.
The information in this publication was compiled from sources believed to be reliable for informational purposes only. All sample policies and procedures herein should serve as a guideline, which you can use to create your own policies and procedures. We trust that you will customize these samples to reflect your own operations and believe that these samples may serve as a helpful platform for this endeavor. Any and all information contained herein is not intended to constitute advice (particularly not legal advice). Accordingly, persons requiring advice should consult independent advisors when developing programs and policies. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication and sample policies and procedures, including any information, methods or safety suggestions contained herein. We undertake no obligation to publicly update or revise any of this information, whether to reflect new information, future developments, events or circumstances or otherwise. Moreover, Zurich reminds you that this cannot be assumed to contain every acceptable safety and compliance procedure or that additional procedures might not be appropriate under the circumstances. The subject matter of this publication is not tied to any specific insurance product nor will adopting these policies and procedures ensure coverage under any insurance policy. Insurance coverages underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Certain coverages not available in all states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers. Risk engineering services are provided by The Zurich Services Corporation.
