With the construction sector booming, it’s no surprise that XL Catlin has grown its North American construction division yet again, announcing the addition of further underwriting expertise with two new team members in August.
Providing insight into the performance of the industry, Gary Kaplan, president of North American construction for XL Catlin, said, “They can’t find enough workers to do what needs to get done. They continue to grow and they continue to expand and get projects, and the projects keep getting bigger and bigger, too. It’s amazing to watch how gigantic some of the infrastructure projects are getting nowadays.”
The building of liquefied natural gas facilities to export LNG coming out of fracking can cost $5 billion each, and are just some of the large-scale projects that Kaplan is seeing right now, as well as the work going on around the Panama Canal to expand infrastructure so that mega-carriers can fit under bridges and get into the ports along the coasts in the region.
At the same time, the construction industry is waking up to emerging risks that are finally revealing their potential impact on the sector. Cyber, for once, is starting to catch everyone’s attention, said Kaplan.
“Contractors are very conservative and they’re slower to try new things, and I think they were a little bit slower than a lot of other companies to figure out that they were also susceptible to cyber. We’re seeing a lot more of them now interested in buying cyber coverage – that trend has been up for the last two years,” he explained. “We’ve even heard from a couple of them that have had incidents.”
New technology is also being adopted by the sector to decrease costs, improve safety, and increase efficiency. A lot of start-ups are focused on the construction business, and specifically focusing on how to create digital data that helps leadership teams perform better on projects, Kaplan told Insurance Business.
In 2017, XL Catlin’s construction team in North America invested in Pillar Technologies, which uses sensors to monitor for key environmental factors, such as humidity, smoke, water, and noise levels, on building sites. Recently, the division also partnered with TradeTapp, a platform that helps contractors making more informed subcontractor hiring decisions.
“The more progressive, innovative companies are starting to adapt pretty quickly, and I think it’s going to be really beneficial as well for the companies that are insuring them,” said Kaplan. “It should create higher quality projects with lower safety incidents. I’m really bold on that, but that all comes with: any time you’re creating more digital data, you’re also creating more cyber exposures, so they’re going to have figure all that out as well.”
New risks, emerging technology, and a growing sector require all hands on deck to provide crucial insurance and risk mitigation services to clients. When XL Catlin initially set up its North American construction team in 2010, Kaplan was a team of one, whereas the team today has close to 90 employees.
“We’ve been growing every year for the last eight years,” said Kaplan. “Our value proposition is the fact that we have six different products that we sell to a single customer and we have all those people working within our business, so that seems to be very popular with the contractors right now.”
He added that he expects the unit to hit $3 billion in gross written premium by January of next year.
“That requires people, so we’re always trying to find out who’s out there that would be interested in working on the kind of team that we’ve built, and once we get those relationships and we see opportunities to add people to our team, it actually grows pretty quickly.”