Bringing Together Construction Stakeholders, Insurers and Leading Constructech companies to Tackle Construction Risk
The Explosion of Tech
The last 10 years have seen an explosion in technology solutions available within the construction and property technology sectors – Constructech and Proptech, respectively. Over 5,000 new Constructech companies have burst onto the scene in the last 5 years alone. This myriad of choice has led to confusion and stunted technology adoption within the built environment.
Brokers and Insurers have begun putting efforts into curating leading technologies to use and marry with their construction claims data to help the industry identify the most promising technologies from this myriad of choice to reduce jobsite risks. Industry leaders are forming technology partnerships to advance these capabilities more rapidly.
The most important Tech
That said, there are really three technology categories that will drive significant modernization and change in the construction industry. Those three technology categories include the Cloud, the Internet of Things (IoT), and machine learning and/or artificial intelligence (ML/AI). These categories are converging to not only create the aware jobsite but are beginning the journey towards the predictive, efficient, and modern technology driven jobsite:
As the above figure illustrates, the IoT devices provide real-time awareness data from the jobsite like nerves, with the Cloud effectively acting like connective tissue between the various IoT devices with Edge computing and software enabling ML/AI to drive jobsite insights.
Software has begun to use real-time data to not only provide early warning of problems but has starting to predict problems and make suggestions on how to enhance productivity. The jobsite has become more transparent, more aware, and predictive thus allowing those on the jobsite to make informed decisions around productivity, quality and importantly risk reduction. An effective IoT backbone for the jobsite bringing together the most impactful IoT solution categories under a single cloud strategy, and a single pane of glass married to a unified data strategy is what the industry needs.
Edge Underwriting
We are seeing the first stages of Edge Underwriting being applied to the construction sector and a singular IoT backbone represents the ideal collaboration space for construction stakeholders, insurers, and their technology partners to work together to find the ideal combination of IoT devices that not only reduce their respective contractual risks but also improve productivity and thus profitability.
As these progressive insurers continue to identify these impactful IoT categories more and more of these devices will be entirely or partially paid for by the insurance sector. In addition, the insurance sector will start improving terms to reflect the changed risk profile of jobs due the ideal IoT configurations being identified. Those contractors with a smart IoT backbone on their projects can utilize various IoT category combinations to not only improve their insurance terms and receive insurer subsidy for technology, but they can also harness the power of these devices to improve productivity, safety, quality, reduce risk and enhance profitability along with overall project execution certainty.
Change is the only option
The two balance sheets with the greatest exposure during the and build phase of the built asset are the contractor and the insurer. With insurance costs having increased in the construction sector by over 30% from 2019 to 2020 and the trend having continued in 2021, modification of one’s risk profile in construction is necessary. Equally, insurers can’t continue to make massive payouts for risks that can be mitigated with today’s modern technology.
Mitigating or eliminating damage caused by water, issues caused by fluctuation in temperature and humidity, bad concrete pours, and changes in weather to name but a few can be managed with the help of a smart IOT platform that can alter frequency, occurrence, and ultimately change one’s risk profile and insurance payouts and premiums.
Tackling these risks and issues with leading technology is a win for the insurer, a win for the contractor, a win for the developer, and importantly a win for the end user of the asset.
Not changing is not an option, and becoming a better builder is a continuous evolution that demands and requires the adoption of technology.
