Specialty trades contractors

Specialty trades contractors

Surrago, James

The specialty trades contractors market is more than twice the size of the building contractors market (see Rough Notes, March 2001)–nearly 431,000 specialty trades contractors, employing more than 3.5 million people, compared with 197,000 building contractors employing 1.3 million. Specialty trades contractors represented a premium market of $7.8 billion in 1999 vs. $3.3 billion for building contractors.

Specialty trades contractors include 18 different categories. The nine largest are plumbing, heating & airconditioning (SIC 1710); electrical work (SIC 1730); masonry & other stone work (SIC 1741); concrete work (SIC 1770); painting & paperhanging (SIC 1720); plastering, drywall & insulation (SIC 1742); carpentry (SIC 1770); roofing, siding & sheet metal work (SIC 1760); and excavation work (SIC 1794).

Countrywide, employment in the specialty trades during the most recent five-year period grew 16.6%. During the same period, written premiums have also increased in all specialty contractor categories combined by 9.2%. As with building contractors, the expanding economy of the past several years has had a favorable impact on the specialty trades, but employment and premium growth within the various specialty trades has varied considerably during the past five years.

Of the specialty trades’ $7.8 billion of annual premiums, more than 85% is represented by workers comp (28.0%), general liability (30.7%) and surety (26.6%). Inland marine premiums represent the next-largest line of business (7.4%), followed by commercial property and auto, which together account for less than 7.5% of the total.

Small and medium-sized accounts–those with fewer than 99 employees–represent the bulk (99%) of the 431,000 specialty trades contractors, and 83.6% of the $7.8 billion premium market. The vast majority (81%) of such contractors, however, actually employs fewer than 10 people.

Countrywide, the average account premium for those establishments employing fewer than 10 is just under $6,700.

For the next largest group of contractors–those employing between 10 and 19 people–the average account premium jumps to $32,400. The average account premium rises to $84,700 for the mid-sized category that employs between 20 and 99 people. More than 3,100 large specialty contractors operate in the United States, each employing between 100 and 499 people and generating an average account premium of almost $343,000. Large specialty contractors represent 13.8% of the $7.8 billion premium market.

In Rough Notes’ Midwest Region, 82,000 specialty– trades contractors generate a total premium of $1.5 billion. Average premium per account in this region tends to mirror the countrywide averages. As is true countrywide, small contractors, those employing fewer than 10, make up the bulk (82%) of the specialty-trades contractors. They develop an average account premium of just under $6,800 and represent 31% of the $1.5 billion premium market.

The next largest group of North Central contractors, employing between 10 and 19, develops an average account premium of $33,000 and represents slightly less than 19% of the $1.5 billion premium market. Almost 5,900 medium-sized risks in the region each employ between 20 and 99 people and generate an average account premium of almost $86,000. Nearly 550 large and jumbo specialty contractors account for about 16% of the $1.5 billion premium market.

Information on this and other niche markets is available from ISO by calling toll-free: (800)-888-4ISO ((800) 888-4476); e-mail: info@iso.com.

James Surrago is vice president, data management & information services of the Insurance Services Office (ISO).

Copyright Rough Notes Co., Inc. May 2001

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