With continued uncertainty surrounding the economy, the public sector continues to be an attractive hedge for contractors looking to diversify their work with a more consistent revenue stream. 2023 is expected to see the beginning effects of the passage of the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL), which creates $1.2 trillion in funds and $550 billion in new investments over the next five years. This nearly doubles federal investment in new and existing programs, including roads, bridges, rail, highway and pedestrian safety, public transit, as well as several other sectors. As a result, it is projected that construction spending in the United States will grow 5.5% in 2023.
Material sourcing and price increases continue to be a main source of challenge for the construction market navigating the supply chain bottlenecks as a result of Covid. Some public agencies have begun to respond in contracts to address these potential issues, but continues to be an area to review and consider logistics ahead of pursuing a project, to avoid as much uncertainty in cost increases and project delays as possible.
At 126 months, the U.S. is in its longest economic expansion in history, breaking the record of 120 months of economic growth from March 1991 to March 2001. The surety industry has closely followed this run with a trend of profitable years, as surety losses have remained relatively low. As the surety industry has progressed through this profitable run, we continue to monitor how surety companies evaluate construction companies for their surety programs and terms they offer, to keep our clients in the most favorable position for growth.
With cost increases experienced both in material and labor, tied to increased spending available for further growth in the public sector, surety capacity has been an area of challenge for many commercial construction companies, whether entering the public sector for the first time, or having been in the market for years but continuing see contract amounts increase as a result of these costs rising. Newfront helps to navigate that challenge, by utilizing our local expertise and partnering with local surety carriers to assist with that growth.
The market is ever evolving and we, at Newfront, are experts and can help you navigate challenging times and opportunities. We are here to answer all of your questions and to help guide you through all of your insurance needs.
About the author
AVP of Surety and P&C
Ben Wells is our AVP of Surety and P&C. He is an expert in the Northwest. He has spent the last decade in the surety industry holding positions both as a surety underwriter and surety broker. He leverages his unique experience in advising clients locally on how to position their company to support growth in public works while protecting their assets. You can connect with Ben on LinkedIn.
The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.
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