The construction industry faces many challenges in 2023 and beyond, but there are also advancement and opportunities that should excite claims and litigation professionals. For this look at the future of the industry, we surveyed CLM’s construction professionals and asked which advancement in construction they believe will have the biggest positive impact on the industry and the claims and litigation environment.
Survey respondents were quite optimistic about 3D printing’s ability to improve resilience, and lower building and claim costs:
Jane Lulli, vice president, claims, Frank H Furman Insurance—“I am most interested in 3D printed homes. I feel they are resilient to environmental hazards and are similar to the brick house in ‘The Three Little Pigs.’ Nothing is going to blow down a 3D printed home. The reduced cost and time to build a 3D printed home is cost effective. The safety and soundness of the structure is insurance-efficient as potential casualties are reduced by their very construction.”
Henrietta Hinojosa, vice president, construction defect claims, National Claim Services LLC—“3D printing because it is possibly an answer to the significant construction labor shortage, and it lowers workers’ comp costs, overhead, etc.”
Thomas Olsen, partner, Lorber, Greenfield & Polito, LLP—“Builders have long viewed pre-fabrication as saving money, time, and having an environmental benefit, and that will continue to expand from isolated building components to entire structures. Recent buildings have been constructed in short periods of time using 3D printing and then assembling the components in just a few days. This trend will continue in both residential and commercial settings. Insurers will see some risks be eliminated and lessened, and can adjust their underwriting and claims assessment accordingly.”
Michael Rodriguez, casualty claims specialist, Tokio Marine HCC—“With the emphasis on sustainability and continued condensing of suburban living centers (impacted by more people working from home), I am curious to learn of the longevity and quality issues of 3D printed structures. How do these structures stand up to weather cycles and earth movement? Are these structures more demanding in terms of maintenance? Is a savings realized when analyzing costs of construction and subsequent ownership? What is the environmental impact of such construction?”
AI and Machine Learning
It is becoming difficult to find an industry that is not expected to be impacted in some way by artificial intelligence. For construction, CLM professionals see a number of benefits:
Derrick Mullen, vice president, Seneca Insurance Company, Inc.—“Machine learning and artificial intelligence will soon affect every aspect of a construction project, from planning to project closeout. Additionally, AI and machine learning are improving novel methods of building, like modular construction, which is a growing part of the construction sector.”
Brandon Haas, practice group partner, Kelley Kronenberg, P.A.—“I believe the biggest positive impact on the claims/litigation environment in the construction industry will be a result of advances in technology usurping the positions typically held by human beings. With the advancements in AI, which appears to be accelerating at an unbelievably fast rate, more and more employers are looking to cut costs and increase efficiency by laying off employees and focusing on replacing those positions with technology.
“As these advancements become more useful and accessible to the construction industry, it could potentially cause huge layoffs of workers to replace with AI that can perform the same or similar tasks at a fraction of the cost of a human employee. This is a phenomenon that we have recently seen in the tech industry.
“The replacement of these workers will have a positive impact on employers as there will not be as many on-the-job injuries or workers who are unhappy with their former employers leading to a wrongful termination or retaliation claim. There is a realistic scenario the number of these claims decreases significantly as technology in the construction industry advances.”
John Bergquist, partner, Parsons, Lee & Juliano, P.C.—“New AI and/or robotic quality control technology for onsite inspection of progress and compliance with plans and specifications.”
Other Technology Advancements
Beyond AI and 3D printing, CLM professionals are bullish on a number of other technology advancements that will improve risk management and claims processes:
Deanna Boras, AIC, supervisor, claims P&C, Alaska National—“Estimation programs. When I first started adjusting, I hand wrote estimates. As technology increases, so does the ease of estimation.”
Craig Steigerwalt, construction consultant, Exponent—“I might be biased because I’m a licensed operator, but I think drones will have the biggest impact. They continue to get more capabilities that will have a huge impact on the claims environment, especially related to natural disasters.”
Hinojosa—“Worker tracking devices, as it potentially lowers injury/accident claims as well as provides potential evidence to support a defense for accidents/incidents that were previously ‘unwitnessed.’”
Kimberly Hirschman, partner, Rembold Hirschman—“Electronic sensors installed to monitor and provide notice concerning structural members of high-rise buildings.”
Stuart Poage, attorney/mediator, Pennington, P.A.—“Use of technology to document the construction process. It is easier now for contractors to photograph, video, and take drone footage of their work as it is done as proof of satisfactory and approved conditions during the construction process.”
Brian Kahn, attorney, Chapman Glucksman—“Electronic data management and on-site monitoring, as it will help others confirm communications and conditions.”
William Gandsey, chief operating officer, Tri-Tech Restoration—“I think the video aspect of recording all data on losses will influence the future in claims.”
New and Better Materials
Construction Claims has covered many of the risks associated with the increasing use of new building materials and techniques, but survey respondents highlight the benefits, particularly with respect to resilience:
Gary Brown, partner/business unit leader, Kelley Kronenberg, P.A.—“Advances in ‘smart’ building materials will result in safer buildings, which benefits consumers and the public at large, and should also impact the claims and litigation environment by potentially avoiding or mitigating building failures.”
Charlie Stevens, claims manager, Tokio Marine HCC—“With 80% of our nation’s water and sewer infrastructure considered to be in poor, very poor, or elapsed condition; and more than $1 trillion needed to replace the aging pipes, I believe new pipe/flow liners will be a solution that significantly extends the life of the pipes without having to excavate and disrupt roads, sidewalks, landscaping, and other infrastructure. It will significantly reduce claims and claim cost.”
Marshall Henson, JD, DIA, construction defect claims specialist III, Nationwide Insurance—“Advances in home wrap technology such as ZIP System or ‘mass plywood panel systems’ will likely decrease the average damage done by water intrusion. The more we see better flashing and wrap systems in use, the better the outcomes will be.”
While technology in all its forms certainly took center stage among our survey responses, some CLM professionals see renewed commitments to risk management and risk transfer mechanisms as having the biggest positive impacts on the industry going forward:
Brad Shefrin, partner, Hall Booth Smith—“For LEED projects, getting the right design professionals involved prior to budgeting and contracting.”
Cynthia Garcia, chief risk officer, Bernards—“Excess and difference in conditions (DIC) of wrap-ups available to contractors/subcontractors will enhance project risk performance; streamline contract negotiations; and reduce litigation costs.”
Alan Mullenix, principal consultant, construction, Envista Forensics—“I have been involved in all stages of a building project lifecycle: from conceptual design, to ribbon cutting, to serving as an expert during claims and litigation after things have gone wrong. It is my experience that most engineers work with integrity and fulfill their duties under the engineering code of ethics.
“The unstated assumption on their part is that good intentions, responsive communication, and client satisfaction minimizes their exposure to risk should a project go south. Obviously, this is not true, evidenced by the increasing costs of professional liability insurance for the architecture and engineering (A/E) industry.
“Therefore, it is encouraging to see the A/E industry respond with renewed efforts at improved risk management. These include increased efforts at reporting failures as represented by Collaborative Reporting for Safer Structures US (CROSS-US). This organization publishes safety information based on anonymous reports and broadcasts lessons learned to the design industry. Further, organizations like the Coalition of American Structural Engineers (CASE) work diligently to provide guidelines and best practices to reduce claims and improve the quality of the design efforts. These efforts are essential in preventing problems before they occur and, ultimately, in providing a better built environment for our society.”