NAHB Soliciting Information From Members to Solve General Liability Insurance Problems
In an unprecedented effort, NAHB is soliciting information from its members to help remedy problems with general liability insurance (GLI). This has become a critical issue for the home building industry, with a growing number of builders having trouble getting adequate coverage or paying too much in premiums.

In many parts of the country, builders have seen GLI premiums increase 10-fold over the last three years, while numerous exclusions have severely diminished the protections afforded by these policies. In some places, even obtaining GLI coverage has become all but impossible.

“Our members have made it clear that they want the NAHB federation to do something about this serious problem,” said NAHB President Bobby Rayburn. “In fact, builders responding to NAHB’s Critical Issues Survey consistently rank GLI as their greatest concern.”

A task force formed in 2003 found that it might be possible to bring new GLI products to the market that would solve the members’ GLI problem. The task force interviewed three prominent insurance brokerage and consulting firms and determined that Marsh USA was best suited to meet the home building industry’s needs.

Marsh, a global leader in risk and insurance services, has a consistent track record of creating innovative solutions for industries such as pharmaceuticals and the medical industry. NAHB’s GLI Task Force and Marsh have developed a plan to address the home building industry’s GLI crisis.

The Marsh-NAHB plan seeks to achieve three primary objectives:

1. An accurate national picture of the loss experiences of the residential construction industry.
2. New insurance products that will give builders access to lower cost GLI with better coverage and broader availability. These products may be available as early as mid-January 2005.
3. A structure that allows local insurance agents to sell any new GLI products and that enables NAHB and its state and local affiliates to participate in revenues generated by these new products.

The first step of the plan is to gather data from NAHB builder, remodeler and subcontractor members. Marsh needs information about the frequency and severity of losses — how many losses builders have experienced and how much they have cost. Marsh will develop a database of about 4,000 builder, remodeler and subcontractor members, with information such as number of units produced, annual revenue and insurance coverage information for the past five years. The information gathered by Marsh will be held in strict confidence and will not be available to members or staff of NAHB.

Participating members will complete a survey about their business and its loss experience. They will also need to send a letter to their insurance carrier granting permission to share loss-run information with Marsh. NAHB and Marsh need to complete this data-gathering effort by July 15.

“The success of this initiative hinges on the quality and quantity of data that builders, remodelers and subcontractors provide to Marsh,” Rayburn said. “The better the data and the more builders involved, the better the products we will see when this process is completed.”

Marsh will use the data to conduct an extensive analysis of the risk management needs of the home building industry and then develop new insurance products.

“There is a strong potential for NAHB and its affiliates to enjoy significant revenue from these products,” Rayburn said. “Any revenue that comes from this initiative will be shared by NAHB and its affiliate associations.”

To obtain a copy of the GLI survey or consent letter, click here. Or contact the NAHB Member Service Center at 800-368-5242 x8600. If you have specific questions about the data collection initiative, contact Brett Diggs at 800-368-5242 x8453 or Clayton Traylor at x8490. [ return to top ]