The passage of the Infrastructure Investment and Jobs Actin 2021 represents one of the most significant investments in U.S. infrastructure in decades. Allocating $1.2 trillion over 10 years, the act emphasizes modernizing transportation systems, repairing aging infrastructure and enhancing public safety. While its primary focus is on rebuilding roads, bridges and public transit, its effects ripple across industries, including insurance.
For insurance agents and brokers, the IIJA presents both challenges and opportunities. As transportation spending reshapes risk landscapes and coverage needs, agents play a pivotal role in helping clients navigate the evolving insurance environment.
This article explores the IIJA’s key elements; its impact on insurance; and practical advice for agents and brokers to provide better service to their clients.
Understanding the IIJA’s transportation investments
Transportation funding is at the heart of the IIJA, with over $550 billion in new federal investments directed toward improving the nation’s surface transportation systems:
Roads and bridges: $110 billion for repairing and upgrading over 173,000 miles of roads and 45,000 bridges.
Public transit: $39 billion to modernize buses, rail systems and stations.
Railways: $66 billion for passenger and freight rail improvements, including Amtrak expansions.
Airports and ports: $42 billion for upgrading airports, ports and waterways to enhance logistics and safety.
Electric vehicles: $7.5 billion to establish a national EV charging network.
These investments aim to improve efficiency, reduce congestion and enhance safety. For the insurance industry, they signal significant changes in risk profiles—particularly in auto, commercial liability and infrastructure project coverage.
How transportation spending affects risk
The IIJA’s impact on risk profiles creates both opportunities and challenges for insurers and their clients.
Auto insurance: Safer roads, shifting risks. Improved roads and bridges are expected to reduce accidents caused by poor infrastructure. This could lead to fewer auto insurance claims and more affordable premiums for drivers. However, agents should also consider:
- Higher traffic volumes. Safer roads may encourage more travel—potentially offsetting some safety gains.
- Emerging vehicle technologies. The rise of autonomous vehicles and EVs introduces unique risks, such as cyber security threats, expensive repairs and evolving liability concerns.
Agent advice. Educate personal and commercial auto clients on how these changes could impact their policies. For example, discuss coverage options for EVs or advanced driver-assistance systems. Stay informed about evolving regulations and carrier adjustments to premiums and underwriting guidelines.
Commercial insurance: Increased demand and complexity
The IIJA’s large-scale infrastructure projects mean more demand for policies like builder’s risk, general liability and professional liability. However, these projects bring complex risks, such as cost overruns, environmental challenges and contractor disputes.
Agent advice. Help contractors, engineers and transportation agencies secure specialized policies for their roles in projects. This may include endorsements for weather-related delays or material shortages. Encourage clients to implement strong safety protocols, project oversight and compliance with federal insurance requirements.
Climate resilience: Mitigating disaster risk
With a focus on making infrastructure more resilient to extreme weather, the IIJA could reduce long-term risks for insurers. However, during the construction phase, heightened exposure to flooding, storms or wildfires could increase claims.
Agent advice. Work with clients to assess climate-related risks during construction. Recommend appropriate coverage for disaster mitigation, such as environmental liability insurance for pollution risks or damage to natural habitats
Practical tips for agents and brokers
To provide better service to clients impacted by the IIJA, agents and brokers should focus on these key strategies:
Conduct comprehensive risk reviews
- Meet with clients to understand their roles in infrastructure projects and identify potential exposures.
- Review existing policies to ensure they align with new risks, such as those introduced by large-scale construction projects or new vehicle technologies.
Stay informed about federal regulations
The IIJA comes with strict compliance requirements for federally funded projects. Agents should:
- Monitor updates on insurance mandates, such as minimum liability limits or worker protections.
- Educate clients about these requirements and ensure their coverage meets compliance standards.
Leverage relationships with carriers
Work closely with insurance carriers to:
- Stay updated on new products designed for infrastructure-related risks.
- Negotiate tailored solutions for clients, such as bundled coverage packages for contractors or transportation agencies.
Embrace emerging technologies
- Help clients address new risks associated with EVs and autonomous vehicles by recommending appropriate cyber liability coverage or product liability coverage.
- Guide businesses in logistics or transportation toward policies that reflect changes in fleet technology or infrastructure upgrades.
Act as a claims advocate
Construction projects often lead to disputes. Be prepared to:
- Assist clients in filing claims, documenting incidents and navigating disputes with carriers.
- Review and adjust policies regularly as projects progress to ensure coverage remains adequate.
A road to the future
The Infrastructure Investment and Jobs Act is reshaping the transportation landscape and introducing new insurance challenges and opportunities. For agents and brokers, this is an opportunity to become trusted advisers, guiding clients through a changing risk environment.
By staying informed, offering tailored solutions and proactively addressing client concerns, insurance professionals can help clients adapt to the IIJA’s impact while positioning their agencies for growth in this dynamic landscape. The key to success lies in understanding the evolving risks and collaborating with clients to turn challenges into opportunities.
The series
PIA infrastructure series: Introduction
Infrastructure series: Bridge the gap: We need solid structures in a world without flying cars
Infrastructure series: Why broadband internet matters more than ever
Infrastructure series: Aviation initiatives are taking flight
Infrastructure series: Transportation spending and its impact on insurance
Bradford J. Lachut, Esq.
Bradford J. Lachut, Esq., joined PIA as government affairs counsel for the Government & Industry Affairs Department in 2012 and then, after a four-month leave, he returned to the association in 2018 as director of government & industry affairs responsible for all legal, government relations and insurance industry liaison programs for the five state associations. Prior to PIA, Brad worked as an attorney for Steven J. Baum PC, in Amherst, and as an associate attorney for the law office of James Morris in Buffalo. He also spent time serving as senior manager of government affairs as the Buffalo Niagara Partnership, a chamber of commerce serving the Buffalo, N.Y., region, his hometown. He received his juris doctorate from Buffalo Law School and his Bachelor of Science degree in Government and Politics from Utica College, Utica, N.Y. Brad is an active Mason and Shriner.
