No matter the type, background, or present circumstances, all roofing contractors have one thing in common: They must manage the many risks that come with being in this business.
Surely risk management has been a source of pain for roofing contractors as long as there have been roofing contractors. In the past several years, however, the changing world of business insurance and workers’ compensation insurance has moved past pain to a “critical” stage for many in the trade. In the last year, I have had to bear witness to good friends who have literally given up trying to find liability insurance, or workers’ compensation insurance they could afford to buy. Not trunk-slammers or jacklegs, but legitimate roofing contractors who are being left to fend for themselves, assuming all the risk, possibly to the detriment of their employees and clients.
There are reasons the insurance market has soured, and there are reasons risky enterprises like roof contracting are targeted by insurers. The problem is greater in some states than others, and has impacted some market segments harder than others.
What to do?
No offense to my beloved publisher, but if I had a solid answer to that question I wouldn’t be writing here, but would be charging you $1,500 each to teach it in seminars at fancy hotels all over the country. There are, however, just a couple of things to share that may not give you instant relief, but might make you feel better.
First, understand that while “risk” is a four-letter word, it is part of the reason you get paid for what you do. If this stuff was easy, anyone could do it and we would all be out of a job. It comes with the territory. Your most important job in times like this is not seeking out the best insurance for the least money, but is (as it always should be) proactively managing your risk. Operating a sound, organized and safe roofing operation will always, always make you a more attractive client to insurers. You simply must be highly “insurable” to survive today’s market.
Second, the fortunes of the insurance industry, as with all businesses, tend to run in cycles. This is a notably rough time for insured and insurers alike, but if history repeats itself it will improve in time. As we pass through this cycle, we all will lose a certain amount of time and focus working on solutions. But remember that insurance, by design, is a way of spreading risk among a broad group, so even when disaster strikes we can survive.
Last, but not least, let me share one success story with you. The Florida Roofing, Sheet Metal and Air Conditioning Contractors Association Inc. sponsors a self-insurers fund (FRSA/SIF) for workers’ compensation that is available to FRSA member firms. The FRSA/SIF operates in one of the toughest workers’ comp markets in the nation, and has for many years. The members who join the fund are required to maintain a strong safety program and continuously work to improve loss ratios.
FRSA recently announced the passage of Florida Senate Bill 50A – a workers’ compensation reform that contains initiatives that the association has been actively promoting for many years. This piece of legislation places limits on construction exemptions (individuals who put themselves forward as sub-contractors to “opt out” of paying workers compensation premiums) and increases the authority of the state to prosecute those who contribute to the worst problems in the system. Additionally, this legislation reigns in fraudulent workers’ comp claims and legal expenses on a number of levels. This is a vast oversimplification of sweeping legislation, but before the ink dried on Florida governor Jeb Bush’s signature, the bill yielded a “level 14 percent rate reduction” on workers’ compensation premiums effective October 1. Also, some insurers that had fled the state have agreed to reenter the market increasing availability for everyone.
Hopefully other state legislatures will take note. I encourage you to take note of the efforts of the FRSA and the FRSA/SIF as well. There are many obstacles to self-insuring in many states, but roofing contractors as individuals and through the various trade associations can certainly lobby for positive change in their respective state legislatures.
I congratulate all my friends at FRSA and thank them for the encouraging news in an insurance market that continues to give us little to cheer about.