Allen Bradley is the CEO and President of Amerisafe Inc., a provider of high hazard workers compensation insurance. With approximately 40 percent of its business in the construction industry, including more than 8 percentage points of premium from roofing contractors, the economic downturn is taking its toll on Amerisafe’s clients. Yet, with every challenge comes an opportunity, according to Bradley. “While the market is tough and a number of roofing contractors may not be able to survive the downturn, I believe there will be consolidation in the industry which will provide opportunity to some contractors,” he said. “While the overall universe of business activity will contract, those who have planned well could actually expand by increasing their market share.”
The country’s economic problems have negatively impacted the insurance industry as well. According to Bradley, the bottom line for contractors is that the insurance industry’s future investment income has shrunk, and now the industry is refocusing on making an underwriting profit, so premiums will rise. “These rate increases will not be uniform from state to state, by class codes or individual contractor, but one can anticipate fewer insurers offering coverage and rates trending upward,” Bradley said. “Contractors with a good loss history and with a demonstrated commitment to a safe workplace will be the big winners in the marketplace. These are the contractors I believe will not only survive but may actually thrive in the coming market.”
Bradley offered some advice for roofing contractors: “First, talk to your agent and develop a plan for your insurance program. Agents can explain your options and provide you with a list of alternatives to renewing your insurance program as it exists today. Working with your agent, develop a plan for approaching the insurance market. Typically, businesses try to bundle their coverages with one insurer. Consider unbundling those coverages as an alternative to see if costs can be reduced.”
Another option involves increasing a deductible or retention level. “Increasing one’s deductible can significantly reduce one’s insurance costs,” Bradley noted. “The most expensive portion of your coverage is the lower layer. So, you might consider increasing your portion of the risk and keeping the higher limits to protect the business from a catastrophic event.”
For contractors that have had a significant loss, make sure that post-accident remediation has been undertaken. Bradley believes that most insurers are favorably impressed when an insured undertakes corrective action. “Insurers who understand your industry and business operations will appreciate your efforts to correct a deficiency,” he said.
Finally, make sure your insurer is financially secure, urged Bradley. “Workers compensation claims, for example, can go on for 10 or 15 years; you want to make sure your carrier is around to pay the bills.”