Canada’s shortage of skilled workers can lead to a decrease in quality and workmanship, which could increase the likelihood of an insurance claim and construction insurance rates.
It’s already happening, says Darren Tasker (head of energy and construction in Canada at Allianz Global Corporate & Specialty).
He stated that he saw the situation from an insurance perspective, with the number and severity of claims rising significantly. Canadian Underwriter. In terms of frequency, claims related to design and faulty workmanship ranked number 1.
Tasker stated that “in the construction space, those are the most common types of losses we see in Canada.” “That and water damage are likely to be the (Number 1) 1 and 2 perils that we see in the property construction side.”
Tasker believes that the increase in claims can be explained by “just the volume of construction activity and the shortage of skilled labour to do [the] work.”
It is difficult to find skilled labour. BuildForce Canada, the Canadian construction industry association, reported that 257,000 workers would be retiring by the end of the decade. This means that more than 307,000 workers must be hired by 2029. The construction industry is already slowing down in terms of its recruitment numbers.
Construction firms aren’t sending even their second-best crew to job sites because things are so bad. Tasker related the story of a client that realized they were receiving the leftovers.
Tasker stated that a chemical client had built one plant. They hired a respected construction company, but then everything went horribly wrong. After some time, they realized that they didn’t have the A-team nor the B-team from this construction company; they may have had their D-E- or F-team. They had to fire the contractor and hire a new one.
This type of situation does not always lead to an insurable claim. Tasker stated that it could be an insurable claim if an event occurs.
Some construction companies have begun to hire foreign contractors to bridge the gap. These are often from Spain or Italy. In a February report, BuildForce stated that skilled labour shortages can only be filled by immigration.
Tasker said that while hiring skilled and specialized labor from overseas can be beneficial for clients, it is not always a partnership that works.
Theoretically, you get the best of both the local expertise and the skilled labour from abroad. It works in many cases. Sometimes it feels like a new marriage. These joint ventures can work out well for firms. Sometimes, two, three or four firms work well together. Sometimes they don’t.
Tasker stated that compatibility between local and foreign firms is an important consideration. He said, “That’s…difficult for us to assess, but we certainly factor that in.” These firms have a lot of experience in Canada and have worked with one another in the past. We have confidence that they will do the next project well.