Insurance claims in construction can be costly and time-consuming, placing a strain on insurers' profit margins. To address this, insurers are looking for ways to reduce claim frequency and minimize payouts. By adopting construction management software, construction companies can enhance safety protocols and revamp workflows, resulting in fewer claims. This has led forward-thinking insurers to actively seek partnerships with clients who use such technology, recognizing that these tools not only reduce claim filings but also improve overall profitability.

Let’s explore how.

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High cost of insurance claims in construction as of 2022

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Insurance claims in construction often lead to significant financial strain on insurers. As claims increase in frequency, the associated administrative and settlement costs grow, cutting into profit margins. This also leads to higher premiums, which can make pricing policies competitively challenging. For insurers, managing these claims efficiently while minimizing payouts is essential to maintain profitability.

• Common claims: Workplace accidents, equipment damage, project delays.

• Impact on insurers: Frequent claims increase operational costs, inflate premiums, and reduce profitability.

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Construction management software reduces claim filings

Construction management software has become an essential tool for contractors, allowing them to streamline operations, enhance safety protocols, and maintain full visibility over their projects. For insurers, this means fewer opportunities for accidents, mistakes, or negligence that would typically lead to claims. By digitizing and automating key processes, the software helps mitigate risks long before they turn into costly filings.

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Here’s how:

1. Improved project visibility

• Real-time data and progress tracking allow contractors and construction owners to spot risks early.

• By identifying potential safety issues or equipment malfunctions ahead of time, fewer accidents occur and claim filings can be significantly reduced.

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2. Accurate documentation

• Time-stamped photos, redlined drawings, and form submissions create a digital paper trail.

• This makes verifying claims much easier, shortening resolution time and minimizing dispute costs.

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3. Risk management and analytics

• Advanced software uses predictive analytics to assess risks and prevent accidents, reducing the likelihood of claims.

• Insurers gain better visibility into how clients manage their risks, allowing more accurate underwriting.

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Maximize profit margins with structured claim management

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Construction management software not only helps reduce the volume of claims but also refines the entire claim process. By offering detailed insights, automated workflows, and a complete view of project progress, the software arms construction companies with accurate data that speeds up the claims process.  

• Faster claim resolution

• Automated workflows in software speed up claim processing, reducing administrative overhead.

• With complete and accurate data, insurers can close claims faster, saving on labor and legal costs.

• Reducing fraudulent claims

• Access to complete project records discourages fraudulent or exaggerated claims.

• When timestamped photos, maintenance records, and safety checks are documented, insurers can evaluate them during the claim assessment phase.  

• Data-driven risk pricing

• Insurers using data from construction software can better price policies based on a construction company’s safety record and project management efficiency.

• This leads to fewer surprises and better profit margins.

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‍ Construction software use cases to reduce claim filings

1. Preventing equipment damage claims

Real-time asset tracking in construction management software actively prevents damage by continuously monitoring equipment location, usage, and maintenance needs. Here’s how it works to reduce breakdowns and wear:

• Usage tracking: By monitoring equipment usage and idle times, the software helps prevent overuse, which leads to wear. Alerts can notify managers when machinery is at risk of exceeding recommended operational hours, prompting preventive maintenance.

• Scheduled maintenance reminders: Automated reminders based on real-time data ensure that routine maintenance is performed on schedule, reducing the chance of costly mechanical failures.

• Location tracking: GPS tracking reduces the likelihood of misplacement or theft, both of which can contribute to equipment deterioration.

Fewer claims for equipment damage can result in lower premiums for the contractor and reduced payouts for the insurer.

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2. Lowering workplace accident claims

By integrating safety monitoring workflows into construction management software, companies can proactively manage safety compliance and reduce injury risks. These platforms typically include digital safety forms that workers must complete at set intervals, covering checks like equipment inspection, hazard identification, and site conditions.  

This routine process creates a permanent record, ensuring safety tasks are consistently followed and logged. When issues or violations are identified through these workflows, they can be promptly addressed before they lead to accidents, ultimately helping reduce workplace injury claims by over 30%.

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3. Fraud prevention

Digital documentation from construction management software, such as photos, logs, and timelines, creates a robust record of site conditions, safety protocols, and project activities. When an injury claim is filed, insurers can review this data to verify the legitimacy of the claim. For example:

• Photos and timestamped records: Photos provide visual evidence of the environment at specific times, allowing insurers to assess whether safety protocols were followed, and any hazards were present. Time-stamped images can verify if the conditions align with the claimant’s account of the incident.

• Activity logs: Detailed logs track who was on-site, what tasks were performed, and when safety forms or inspections were completed. This helps insurers verify if the claimed injury matches the tasks or timeline recorded. If an injury was claimed on a day the person wasn’t present or performing a task recorded in the logs, the claim could be flagged as suspicious.

• Maintenance and safety check histories: These records show that equipment was maintained and inspected regularly. If a claim involves equipment failure, these logs provide proof that the necessary checks and repairs were completed, helping insurers dispute claims based on faulty equipment.

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‍Long-term value for insurers

Integrated safety and project management features in construction software empower companies to monitor risks and proactively address hazards. By tracking safety protocols, equipment maintenance, and project activities, they can prevent workplace injuries and equipment breakdowns. This reduces the number of claims insurers handle while providing well-documented records for faster claim processing.

• Real-time safety monitoring: Alerts for safety violations prevent accidents before they occur.

• Scheduled maintenance tracking: Ensures timely repairs to reduce equipment breakdowns.

• Comprehensive project oversight: Enables ongoing assessment and mitigation of potential risks.

• Accurate documentation: Provides reliable, real-time data that supports faster claim resolutions.

Leading to

Enhanced client relationships

Insurers can improve client relationships by promoting the adoption of these technologies. Helping clients reduce claims builds trust and strengthens long-term loyalty.

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‍More accurate underwriting

Data from construction software helps insurers assess risk more accurately, enabling better policy pricing and fewer unexpected costs.

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‍Finally, insurance companies’ expectations

In today’s risk-laden construction industry, insurers benefit greatly from working with clients who leverage construction management software. By enabling safer work environments, proactive maintenance, and accurate record-keeping, this technology empowers construction companies to minimize claims, directly benefiting insurers with reduced payouts and quicker settlements. Partnering with tech-forward contractors not only strengthens insurers' portfolios but also sets a new standard for profitable, efficient claim management in the industry.

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