January 1, 2012

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Construction

Utah Business Staff

January 1, 2012

Utah has tried to be a little bit progressive regarding immigration reform. But some of our statutory changes were challenged and are going to have to be readdressed. Is anybody optimistic about any immigration changes happening on a national level?

BULLARD: We ought to continue to support the business leaders in Utah, the chamber, and others who come up with some good solutions and lead the way in terms of public opinion. We are going to have to educate the voters. The political leaders back there know what has to be done. If you put them in a room, they could solve this in 15 minutes. They are running from the issue because of the idea that there is a litmus test that you are not a conservative or you are not a liberal if you do certain things. It’s not that they don’t know back in Washington what the solution is or what some compromise would be to get things moving. They run from the issues because of the political process and the voters.

We ought to be educating our people out there to have what the Utah Compact advocates, which is a balanced, fair, measured approach to issues like this. We are not going to round up 15 million people and send them over the border. We have to have a measured approach, and they cannot seem to come to that because they run from the voters.

CLYDE: I agree with Lonnie a hundred percent. We’ve got to stand up and say, “We need these workers and we need these people in our community.”

BULLARD: You deal with issues like that every year, and they are just as complicated and just as meaningful for your business and you sit down and you solve them. And it may not be exactly what you want, but you move on. And we are in this paralysis in this country because all we can do is solve the problems when there is a crisis that demands it.

How are the sureties responding to the construction slowdown? What trends are you seeing in the surety insurance underwriting?

BUCKNER: On the surety side, there is a lot of capacity out there. Surety markets were planning to have a lot of losses this last year and it didn’t happen. So there seems to be a lot of capacity. That being said, surety underwriting is very strict still. They are asking for more interim statements. They want to know exactly where you are throughout the year. They want to know what is going on at any given time. There is an increased SBA program that expands out capacity for smaller contractors.

On the insurance side, workers compensation rates have to move. The largest writer of workers comp in the state, the Workers Compensation Fund, is going to announce soon their combined ratio for last year, which is claim dollars versus claims paid out. It was 122 percent. So every dollar they got in, they pay a $1.22 back out on claims. It is pretty unsustainable and somewhere along the process, I expect that to go across the board for insurance carriers on the work comp side.

On the liability side, we’re hearing carriers come in and say, “We’ve bottomed. We’ve got to get two or three points of rate.” For the most part, that is holding. In some situations, you get mavericks who come in and say, “We are not going to do that. We’ll see who survives.” The markets are under some stress right now.

WALTER: The larger carriers on the insurance and the liability are pushing the market. They are trying to get the increases of maybe 5 to 10 percent on your liability increases. So plan on increases for your renewals next year.

Sureties are staying steady. They are really looking at interim information and they want to know that you know where you are and that there is cash in the business, but they are not impacted with losses. They have been conservative over the last several years and made a lot of money.

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