By using data analytics to understand and manage construction project risks, Rosetta Risk Management can help contractors and developers reduce their risk profiles, facilitate proactive risk management and lower insurance premiums
The construction industry is known for its complexity, risks, and costs. For developers and contractors, construction insurance premiums are a significant and increasing cost and the process of securing insurance is becoming more cumbersome as the market
move towards stability.
However, with the advent of digitisation of the built environment, all parties are increasingly using technology not only to better manage construction project risks but also to improved productivity, increase sustainability and maintain or improve margins.
Data can lower insurance premiums and increase insurability but up until now developers, contractors and the insurance market have had no way of collaborating effectively to maximise the value of the data being generated.
How does RRM use construction project risk data?
This is where Rosetta Risk Management (RRM) comes in. RRM uses construction project risk data to help developers and contractors secure lower construction insurance premiums, as well as to increase the insurability of Modern Methods of Construction such as mass timber.
RRM uses data from a range of applications such as BIM, project management platforms,
image/surveying technology and other IoT based solutions to help underwriters assess
risk, show how the project is performing during construction and identify and analyse
potential risks before they have occurred.
Helping contractors, developers, and insurers to better understand risks
By doing this, RRM can help contractors, developers and insurers to better understand their risks and take steps to mitigate them. RRM’s approach is unique because it combines traditional risk management techniques with cutting-edge data analysis fuelled by data already generated by existing software.
This is increasingly important for insurance companies as currently, the only way for underwriters to assess risk prior to offering terms is to review multiple PDFs, schedules and cost breakdowns, which is both timely and potentially inaccurate.
To track progress and review the quality of work during construction, insurers again must
rely on PDF progress reports or physical site surveys. It is not possible to survey all projects and it is also not possible to choose which projects to survey based on performance as such data is often inaccurate or out of date.
As such survey resources are not nearly as targeted as they could be, which leads to missed opportunities for all parties to mitigate risk and prevent loss. It is also true to say that as insurers lack the capacity to review all information both before and during construction, negative assumptions must be made and this can directly drive-up insurance premiums. Simply put, it’s hard to differentiate good from average from bad in the current environment.
The importance of data analytics in the insurance industry
Access to performance data changes this. Such advancements have been highlighted by McKinsey & Company. In a recent article, they highlighted the importance of data analytics in the insurance industry, stating that “insurers are using data analytics to reduce risk, lower costs, and improve customer engagement.”
For RRM, the solution is simple. By using data analytics to understand and manage construction project risks, RRM can help contractors and developers reduce their risk profiles, facilitate proactive risk management, and therefore help to lower insurance premiums.
Focusing on MMC to mitigate risks
Another aspect of RRM’s approach to risk management is its focus on modern methods of construction, such as mass timber. Mass timber is becoming increasingly popular due to its sustainability credentials as well as speed of erection.
However, insurers are hesitant to provide coverage for mass timber due to a lack of understanding (historical data) of the material and its associated risks. RRM is changing this by using data analytics to understand the risks associated with mass timber and develop risk management strategies to mitigate those risks. This approach is not only increasing the insurability of mass timber but also helping to promote sustainable construction practices.
How? Because design is key for the resilience and performance of a building when exposed to the dangers of fire and water. Technology, including scheduling and image capture can greatly help insurers gain comfort with offering cover, not only during construction but also for the completed property asset. Using technology effectively can provide accurate and detailed records of how the building was built and how it is operated and maintained, greatly helping property insurers to assess risk and therefore offer cover.
The digitisation of the built environment will play a significant role in creating positive risk management ecosystems. In his 2013 paper, Growth through BIM, Richard G Saxon stated that “BIM will create a new environment of data richness that will lead to the creation of new business models and greater efficiency in the construction industry.” This prediction is starting to ring true. The digitisation of the built environment has created a wealth of data that can be used to manage construction project risks, lower insurance premiums, and increase the insurability of modern construction methods.
The digitisation of the built environment is also closely tied to the forthcoming Golden Thread legislation in England and Wales. The draft legislation is aimed at improving building safety by ensuring that all relevant information about a building is available throughout its lifecycle. This is expected to result in a significant increase in the amount of data available for risk management purposes, further increasing the potential benefits for developers, contractors as well as architect’s and engineers with their relationship with insurers.
Preventing claims through proactively managing construction project risks
By proactively managing construction project risks, RRM can help prevent claims from arising in the first place. And when claims do arise, RRM’s data-driven approach can help resolve them quickly and efficiently, reducing the need for costly legal proceedings which are a major contributor to rapidly rising insurance costs.
In conclusion, RRM’s approach to risk management is changing the game for developers and contractors. It is now possible to leverage value from the data they are generating today, and the data they will be generating in the future.
In summary, technology can have a profound impact for both developers, contractors, and insurers. This can be summed up across 6 key areas:
Improved risk assessment
Increased transparency
Streamlined claims process
Predictive analytics
Remote monitoring
Improved communication.
By using data analytics to understand and manage construction project risks, RRM is helping to lower insurance premiums, increase the insurability of modern construction methods, promote sustainable construction practices, and to facilitate faster claims settlements and develop insurance products of the future.
Philip Callow
Founder & CEO
Rosetta Risk Management Ltd
Tel: +447823359993
philip@rosettarm.com
The post Harnessing data analytics to manage construction project risks appeared first on Planning, Building & Construction Today.
