Contractors, insurers link IoT deployment to risk management

A study Dodge Data & Analytics conducted in partnership with Triax Technologies, a Norwalk, Conn., provider of technology for the connected jobsite, finds that while contractors continue to struggle with construction risks, they recognize the benefits of using Internet of Things devices to mitigate them.

According to survey results in Using Technology to Improve Risk Management in Construction, nearly three-quarters of respondents believe IoT will help them control occupational risks, and about half expect it to reduce risks to the public, as well as financial risks and those related to property damage and construction defects. The study also finds that the top motivator for adopting IoT technology is the possibility of lowering insurance premiums (67 percent), followed by recovering lost time due to incidents and winning more work because of a strong safety record.

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“These findings are encouraging and confirm what we’ve suspected: Contractors and insurers alike see the value in leveraging IoT technologies to help collect, analyze and act on risk management data,” says Triax Technologies CEO Pete Schermerhorn.

“Contractors are often a skeptical audience, keeping a close eye on the bottom line,” adds Dodge Data Senior Director of Industry Insights Research Steve Jones. “But when they see something that will improve their projects and profitability, they embrace it. Their enthusiasm for IoT technologies suggests that we may see the project jobsite become much smarter in the next few years.”

Respondents report that they are actively collecting key data, and more importantly, using the insights to further their safety and risk practices. More than half of the survey participants report that they digitally gather (54 percent) or analyze data (59 percent), while 77 percent report that they act upon key safety and risk insights. However, the study reveals budgetary challenges to tech adoption. Only 10 percent of contractors report a dedicated innovation budget and when it comes to funding new risk-reducing technologies, most either plan to absorb the costs in anticipation of long-term gains (44 percent) or pass on the costs (32 percent).

“These findings highlight an important opportunity to shift the industry towards reliance on objective, empirical data,” notes Schermerhorn. “The ability to measure risk is fundamental to managing it, especially in the fast-moving construction environment. It’s essential that contractors dedicate budget and resources to unlock actionable safety and risk insights that can drive improvement in these areas.”

As part of the study, in-depth interviews were conducted with insurers, who agreed that real-time site monitoring can have a high level of potential for reducing risk onsite but that reductions to contractors’ premiums based on technology adoption are unlikely until there is enough actuarial data on the impact of those technologies. However, instituting a cost-sharing program with clients for specific technologies was raised as a possibility, as well as potential savings that contractors could realize from reduced deductible costs and fewer claims.