Risk Management Reimagined: Bringing Innovation to Construction Insurance
There’s no denying that we live in an era of rapid technological advancement. From the iPhones sitting in our pockets, to the laptops and tablets (not to mention WiFi) we use at work, to most recently, the launch of ChatGPT. It feels like the world is changing, and changing fast.
It’s probably hard to imagine that in the midst of all this innovation, some things haven’t changed much—if at all. Construction insurance is one such thing, with traditional insurance brokerages largely placing insurance the same way they did decades ago with manual, time-consuming processes that can take weeks, or even months. As a result, many construction businesses have been underserved in this area.
But with the emergence of platform technology, and the data that comes with it, businesses are now able to better track and understand their risk profiles—making the industry ripe for innovation. There is an incredible opportunity to transform the construction insurance space and fundamentally shift one of the largest industries in the world.
The Power of Data
To illustrate, think of construction insurance a bit like car insurance. One of the biggest factors that determines the price of a policy is how risky a driver you are—in other words, your driving record. But let’s say there was minimal visibility into how one person’s risk data compared to another. This would mean that regardless of whether you have zero fender benders or ten, everyone would get the same generic policy and pay the same high price. In other words, good drivers would essentially be subsidizing the bad drivers, who would have little incentive to improve their driving.
Unfortunately, a vast amount of risk data is not available to underwriters, which is the current reality many construction businesses face when insuring projects. As a result, construction has one of the most expensive insurance costs as a percentage of industry revenues, typically ranging 3-10% for a project’s budget across all stakeholders. That’s $1.5M to $5M on a $50M project, making it one of the largest up-front costs.
Not only that, insurance premiums continue to rise at an astounding rate, increasing project costs, decreasing margins, and hindering many contractors’ growth. Couple all of this with the day-to-day challenges of productivity, siloed communication, lack of visibility into project data, and capacity issues, and it’s no wonder why so many folks feel like they’re constantly trying to play defense.
The good news is that the platform technology, and thereby the data, finally exist to make the leap from “how it’s always been done” to “how it can be done.” Bringing everyone in construction onto a global platform has clear benefits: better communication, fewer mistakes, less rework, and more projects finishing on time and on budget. It also means our customers across the globe are generating massive amounts of data that they can leverage to help them run better and safer businesses.
This data enables folks to go beyond “just covering their bases” and instead focus on how to set themselves up for future success and growth. We now have vast amounts of information on risk—the exact information that insurance companies need and can lead to more favorable, customized terms for construction companies.
Procore Risk Advisors
That’s why I couldn’t be more excited to share the recent launch of Procore Risk Advisors, a modern insurance and surety brokerage with exclusive programs for our customers. These offerings are backed by A+ rated carriers and reinsured by Swiss Re. Through Procore Risk Advisors, we aim to reward our customers with better insurance terms for leveraging technology to mitigate risk.
Because Procore is a complete construction platform, our customers are able to leverage the data generated across every phase of the project lifecycle—from bid to closeout—giving them a 360-degree view of their risk management profile. By leveraging these data-driven insights and construction expertise, along with our strong customer-centric and underwriting relationships, we are able to better advocate for our customers to help them receive the insurance and surety terms they have earned.
One of our customers, Casey French – CEO of Clark Construction Inc., shared: “Procore Risk Advisors combined phenomenal construction risk expertise with the unique ability to use data to represent our superior operational efficiency, risk management, and financial controls. This resulted in drastically improved terms, making us more competitive. The executive team feels safe and secure with Procore as our partner.”
Ultimately, Procore Risk Advisors not only gives our customers a more streamlined and tailored insurance experience, but it also connects them with an expert risk partner who lives and breathes construction. Most importantly, when contractors are able to get better coverage and terms, they can continue to drive business growth.
Better Project Outcomes
We know that by using Procore our customers are building safer and more predictable projects. In a recent Procore survey of over 2,000 customers, 83% of respondents agreed that Procore has helped improve their overall quality control in order to deliver higher-quality projects. And 75% reported that Procore helps reduce rework, the root cause of many insurance claims. These operational improvements translate into reduced project risk.
Insurance companies have already taken note. Travelers, a leading construction insurer, recognized this by motivating their customers to adopt Procore. Through our collaboration with Travelers, up to 20%* of their customers’ first-year Procore subscription fees are covered by Travelers, rewarding customers for better managing their risk. We believe our customers should be rewarded. More importantly, we believe their insurance premiums should also accurately reflect their investments in risk management.
The Future is Bright
A few years after Procore was founded, I was talking with a soon-to-be customer who was interested in our software. When he asked me to describe Procore, I said it was construction project management software, and he told me, “You are not in the project management business. You are in the risk management business.” It was one of those moments that stuck with me as a clear example of why we do what we do.
We are in the early days of our journey building financial technology for the construction industry, and I couldn’t be more optimistic about the future. For me, this is the work that I love and why I’m so passionate about continually innovating our products and services to help our customers thrive. As we work toward our vision of improving the lives of everyone in construction, we remain committed to never settling for the status quo. The way we see it, “how it’s always been done” simply isn’t good enough.
When people ask me what my goal is for the future of Procore, my answer is simple: I never want to stop providing people in the construction industry with technology that makes their lives easier, safer, and more productive.
Want to learn more about Procore Risk Advisors? Join our upcoming webinar on April 11th where we’ll cover how Procore Risk Advisors is helping our customers receive the insurance and surety terms they have earned.
Procore Risk Advisors (PRA) is a brand of Procore Insurance Services, Inc. Surety and insurance products provided by Procore Insurance Services, Inc., 221 W 6th Street, Suite 1800, Austin, TX 78701. Licensing Information
*Discounts are not available in all jurisdictions or for all policies or coverages and are subject to eligibility and availability.