The Hidden Risks in Your Construction Fleet

There are some very important risks in your construction fleet that you may be overlooking. Independent contractors can introduce risks and your employees using their personal vehicles could pose other hidden exposure to your business. These are two top issues to be aware of, and here are some suggestions for mitigating them.

Independent Contractors

If you hire independent contractors, you could be sued for their actions in relation to a vehicle accident that they cause while working for you.

To reduce this exposure, ensure that each of your independent contractors has a valid auto liability insurance policy. Make sure the policy is in force throughout the duration of their contract with you. Additionally, be sure that their insurance carrier is financially stable. You can verify the insurance carrier’s financial strength at www.ambest.com.

Also, obtain a valid certificate of insurance from each contractor at the outset of your engagement and verify that coverage exists with their insurance agency. You can do this by looking up the insurance agent listed on the certificate on a web search engine and call the number that you find online to verify coverage. This will help to ensure that the certificate is valid and avoid potential certificate fraud.

Acord form

Contractors sometimes obtain coverage to meet your contract requirements and then cancel the policy shortly thereafter. To prevent this and reduce the resulting risk, be sure to re-check coverage at certain intervals.

We recommend that they do an initial certificate check around day 45, as many cancellations for non-payment happen after the first 30 days of coverage. Then check again around days 90, 180 and once more before the contract anniversary.

Employee use of personal vehicles

Many construction companies allow their employees to use their personal vehicles in the course of their employment. For example, some office employees may run company errands in their own car, or your sales representatives might use their own personal vehicle.

driving recordWhile it’s not a great idea to allow your employees to use their personal vehicle for work, this practice is a business reality. You can reduce this loss exposure by ordering a copy of each potential driver’s motor vehicle record annually. This review should also include anyone who has access to a construction fleet vehicle that is owned or operated by your company.

Doing this can help you protect your company from the financial impact of being sued by employees using their own vehicles for work.

Be sure to have adequate hired and non-owned liability insurance coverage on your automobile liability policy as well. Your insurance agent can verify if you have these coverages in place.

Lack of Skilled Workers a Challenge Facing Construction Industry

NASHVILLE—While a number of issues face the booming construction industry, one concern that has been discussed throughout the IRMI Construction Risk Conference here is the shortage of skilled workers. Projects are larger than ever, with technology and the global supply chain only adding to their complexity, making it even more difficult to find talent.

“The construction industry is absolutely in a war for talent,” said keynote speaker Dominic Casserley, chief executive officer of Willis Group Holdings. He cited a 2013 Willis survey that found 93% of respondents listed a “lack of skilled workers” as their biggest concern. He noted that many workers who left the construction industry during the financial crisis have since gained new skills in other areas and are not coming back.

An example, he said, is in his home, the United Kingdom, which decided in the last two years to return to building nuclear power stations. They had not done this for a number of decades and “quickly found that there were no engineers left. There was nobody capable of building a nuclear power station in the United Kingdom, so our new power station is being built by our great friends, the French. That’s what happens if you lose talent in an area of construction.”

Organizations are putting programs in place in the emerging markets to train talented resources “close to where the action is,” he said. Going forward, however, “We don’t see this challenge getting any easier.” Looking at millennials as a potential workforce, which represent 27% of the U.S. population, “you will see that they have some pretty interesting attitudes about work.”

Casserley noted that of millennials:

● four out of five feel they need to be recognized for their work and want regular feedback

● 72% would like to be their own boss

● 79% would like to have their boss serve as a coach or mentor

● 88% prefer a collaborative to a competitive work culture

● 88% want to integrate work and home life

● 74% want flexible work schedules

Asked how firms can bring millennials into their workforce and be flexible while still getting the job done, he said he views this as an opportunity for companies. “I think this is a very talented, aspirational, exciting generation. They are highly tech-savvy and have grown up in a global world.”

What employers will need to do, he said, is to “get their minds around how to harness that asset.” An interesting aspect about millennials, he noted, is their belief in having social value in what they do. “I can tell you, that for the generation entering the workforce today, that really matters. They want to work for a firm that means something to them so they can go home and feel proud of what they do.”

While all generations may feel this way, millennials are expressing it more openly. “And until you can get your mind around describing what [your industry] does and why it is important to the way the world goes around, I think we will struggle to attract and attain people, particularly that generation,” Casserley said, adding that if members of the industry don’t do this, “you are going to constantly lose people.”

Jack Gibson, president and CEO of the International Risk Management Institute (IRMI), agreed, noting that the construction industry is often viewed as a workplace where people are injured and the insurance industry is seen as a life insurance sales force. “Both industries do so much good, but we have not done a very good job of delivering that message,” he said. Gibson encouraged contractors to get involved in mentoring programs as well as the Insurance Industry Charitable Foundation (IICF), which has contributed more than $18 million in local community grants and more than 155,000 hours of volunteer service.

Zero Tolerance Needed to Stop Construction Injuries

Photo by Caroline McDonald

NASHVILLE–For David B. Walls, president and chief executive officer of Austin Industries, construction safety became a lifelong mission the day he had to answer to the father of a worker killed in an accident. “Why did you kill my son?” he asked Walls over and over.

“Those words haunted me,” Walls said during his keynote address at the IRMI Construction Risk Conference here. “Nothing I could do would bring him back.” Tragic events such as this are “defining moments,” he said. “But we need to get passionate about safety without experiencing a fatality.” Walls explained that the construction industry has a long way to go, with the worst record for fatalities, according to the U.S. Bureau of Labor Statistics.

Organizations, he added, should focus on the physical work environment and the company culture. They also need to realize that a world-class safety program leads to higher quality throughout the organization.

One prerequisite is strong leadership. A good leader takes the time to really listen to people, admits to making mistakes and shares recognition for a project well done with employees, he said. This person also should be consistent in addressing safety issues and assertive enough to stop workers from continuing on a job if unsafe conditions are evident.

An effective leader needs to be accountable and hold the entire team accountable when it comes to safety. For example, workers need to know that breaking certain safety rules could cost them their job. After all, he said, “you have a moral obligation to get employees home to their families each night in a safe condition.”

Walls recommended frequent discussions of company successes as well as failures. Weekly dialogues of near-misses, for example, can raise awareness about how they could have been prevented and encourage safe behaviors. Posting the safety records of contractors “makes them improve quickly,” he said. Walls advocates for both classroom and thorough on-the-job training.

Safety managers and employees also need to focus on what they might be overlooking, the “sins of omission.” For example, he said, “what are you not doing that you could be doing to save lives?” The litmus test, he added, would be for a manager to ask him or herself, “Would I let my child work here?”

Asked by an audience member how to get the necessary buy-in from a CEO, Walls advised, “Get the CEO to walk the job and see the hazards. Go to the job site and see where someone fell and where the accident took place. Two to three people a day are dying in this industry and it is unacceptable.”