Contractor risks have never been more complex, and coverage models are struggling to keep pace. “We are seeing additional exposures,” said Jessica Fryer (pictured), chief underwriting officer at Special Risk Insurance Managers. The forces driving this shift are layered - advancing technology on worksites, post-COVID disruption, and what Fryer called “American-style litigiousness” creeping into Canada’s construction sector.
Fryer, who has worked in the industry for over two decades, said the contractor landscape has transformed, particularly in the last few years. The adoption of smart tech, cloud-based systems, and artificial intelligence is driving efficiency, but not without cost. “Contractors are having to deal with a lot of new materials and technologies… AI and cloud-based smart devices on job sites… increasing efficiencies in some areas, but also leading to additional exposures,” she said.
Many of these technologies also demand new skillsets that are increasingly scarce. With a widening skilled trades gap, contractors must take on unfamiliar methods using crews with less experience. Fryer said this raises underwriting concerns, especially when projects rely on subcontractors brought in at short notice.
European-style modular and prefab construction is gaining traction in North America, adding another layer of change. “More new learning on behalf of the contractors,” Fryer said. As this style of building expands, so does the need for underwriters to assess how it impacts project timelines, code compliance, and safety standards.
Climate pressures are making timelines more unpredictable. “They’re having to re-look at what timelines are because, depending on whether there is seasonal flooding in an area, that can impact their build seasons,” said Fryer. Shifting weather patterns are pushing contractors to use new materials while managing tighter seasonal windows - especially in flood-prone zones.
Contract complexity has also escalated. “Back when I started doing this, particularly for small contractors, you didn’t see a lot of contractual requirements,” Fryer said. “But even for small jobs now, you’re seeing an increase in the number of contractual requirements.”
These contracts, often written by non-specialist risk managers, can introduce unrealistic insurance clauses that brokers must attempt to match. “These are lay people. They don’t often always understand some of the agreements they’re signing,” she said. This leaves brokers caught in the middle, tasked with securing policies for exposures that weren’t previously insured - or insurable.
Labour costs are rising as qualified trades become harder to find. “Contractors are having to pay those skilled trades more,” said Fryer. In many cases, they’re also outsourcing work they previously would have handled internally, adding new layers of subcontractor risk.
Contractors working under price-fixed agreements are especially exposed. If material or labour costs spike midway through a project, there’s little room to adjust. “Contractors are having to absorb those costs, which can lead to financial strains,” Fryer said.
Underwriters now scrutinize crew composition, experience levels, and subcontractor relationships more closely. “Are these subcontractors that the insured has dealt with for many years or are they just kind of hiring whoever’s available?” she said. Delays can trigger penalties, further eroding contractors’ financial positions.
As building codes tighten, some consumers are opting for traditional, eco-friendly methods such as straw bale or earth homes. Fryer said these methods can outperform modern builds in some ways. “The burn rate factor on a straw bale home is actually considerably better than many frame homes,” she said.
However, the insurance market has been slow to respond. “There aren’t a lot of markets that are willing to insure that type of dwelling,” Fryer said. While younger buyers want green options, few contractors are trained to build them - and fewer carriers are willing to underwrite the risk.
“Because of the changing building codes, you’re going to see less allowance for these type methods in areas that are more prone to, say, wildfire,” she added. “All of the building codes are going more towards these newer type construction.”
This is where Managing General Agents (MGAs) are stepping into the gap. “Every conversation I have is how risk is getting more complex,” said Fryer. Traditional carriers are increasingly reluctant to underwrite non-standard risks. MGAs, meanwhile, are scaling to meet the demand for flexible underwriting models.
“It seems every day there’s a new MGA popping up and the risk is getting more complex,” Fryer said. Special Risk Insurance Managers, for example, has built out contract expertise that enables it to underwrite projects other carriers won’t touch.
“There’s truly an opportunity for this segment to grow,” she said, pointing to products like wool insulation that are sustainable, more efficient, and gaining traction. But success depends on evolving insurance appetite. “Insurers need to evolve their thinking to be able to provide coverage.”
