Low construction demand caused the industry to suffer, but these trends have slowly reversed
Los Angeles, CA (PRWEB) April 25, 2013
The Contractors' Insurance industry covers incidents involving employees and third parties in the construction sector. “These clients purchase insurance to protect against damages resulting from accidents and mistakes on job sites,” IBISWorld industry analyst Lauren Setar says. As a result, the industry depends heavily on activity in the construction sector. Unfortunately, all types of construction contracted sharply during the recession as the housing market collapsed and the recession cut demand for commercial construction; however, in 2011, the industry started to recover. Industry revenue is anticipated to jump 8.3% in 2013 as economic recovery continues to lift construction markets. Due to these trends, IBISWorld estimates that revenue is expected to fall in the five years to 2013, declining at an annualized rate of 0.7% to $10.4 billion.
In the five years to 2018, IBISWorld projects steady revenue growth in the Contractors' Insurance industry, underpinned by increased investment in housing and commercial building. “The value of construction is expected to grow, as well, in the next five years,” Setar says. However, increased regulation will create higher operating costs industry companies. With greater regulation, claims become more complex to process. However, the effect of regulation is two-fold. Contractors' insurance is required by law depending on the state and region, and can support the industry by requiring contractors to obtain industry products.
Most contractors that operate in the construction sector are relatively small, which has resulted in a fragmented Contractors' Insurance industry because insurance companies must compete for each contractor's business individually. The level of concentration is on the decline as large players restructure operations to boost profitability. For example, major player AIG has sold off some operations during the past five years in the process of maximizing profitability. Currently, the industry has two other major players, including Liberty Mutual Group Inc. and The Travelers Companies Inc.
Workers compensation makes up a small portion of the industry, but will somewhat curb industry growth. When contractors suffer an injury on the job, contractors' insurance will cover the incident if it is under policy. The number of work-related deaths is expected to fall during the five years to 2018. With fewer accidents, there will be less demand for contractors' insurance. For more information, visit IBISWorld’s Contractors' Insurance in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies that underwrite workplace risks for contractors in the construction sector. These companies generally cover the insured in the case of a loss stemming from contractor or subcontractor negligence on the job. This report excludes a discussion of construction bonding such as surety bonds.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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