Although Marsh's US Insurance Market Report 2010 doesn'tanticipate a big jump in construction activity domestically, theglobal picture may be a little brighter as some industry sectorsbegin to recover from the worldwide economic downturn. Either way,Marsh says in its report, construction firms are faced with avariety of concerns that lead them to take a fresh look at theirapproach to risk management.

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The wave of distressed properties, and its implications forbuilders that may or may not get called upon to finish stalledprojects, is one such concern. "As a result of the economicdownturn, the construction and real estate sectors have become alltoo familiar with the term 'distressed properties,'" the reportstates. "Projects often receive this label after constructionstalls, key project stakeholders default or enter bankruptcy, orlenders foreclose. Distressed properties can present an opportunityfor a prospective buyer that can assess the true cost of takingover the property and measure it against potential future gains.With appropriate due diligence, and a properly structured insuranceprogram that covers existing and future liabilities, stalledprojects can be completed and converted into profitableventures."

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Other issues confronting construction firms include greenbuilding, subcontractor default, joint ventures with othercompanies and liability due to defective work by a subcontractor,according to the Marsh report. "As they seek to maximize profits,construction firms are looking for comprehensive, cost-effectiveand flexible risk management solutions," Reagan says in arelease.

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He joins Marsh from Aon, where he was managing director of itsconstruction services group. While at Aon, Marsh was responsiblefor supporting the firm's international operations, specifically inEurope and Asia, as well as the construction group's recruiting,acquisitions and production in North America. Before Aon, Reaganwas chairman of the construction practice at Willis, and has alsoheld positions at AIG and Seaboard Surety Co.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.