Zurich executive sees higher injury exposure but says contractors are keeping safety front and center
The unprecedented pace of data center construction in the US has intensified an already severe shortage of skilled construction labor, forcing contractors to recruit and train new workers at a faster rate than ever before.
While the industry's response has largely avoided compromising quality or safety, at least one carrier has noted that the influx of less experienced employees is creating a predictable area of workers' compensation exposure.
"The construction industry in the US was already facing labor challenges even before the data center surge," said James Savage (pictured), head of construction casualty at Zurich North America. "Depending on which economist you ask, the industry is currently more than a quarter of a million workers short of demand."
Associated Builders and Contractors estimates the industry needs to attract roughly 349,000 net new workers in 2026 to meet anticipated demand — and 456,000 in 2027 as spending picks up — even before accounting for any acceleration in construction activity.
At the same time, data center construction continues to absorb a growing share of skilled labor as technology companies race to build AI infrastructure.
Contractors across North America continue to report that electricians, HVAC specialists and other technical trades remain among the hardest positions to fill as AI-driven data center projects compete with power infrastructure and manufacturing developments for the same workforce.
MEP trades and the first-year injury problem
Among the most constrained trades are mechanical, electrical and plumbing (MEP) contractors. The labor shortage is acutely felt for this group because data center construction requires highly technical expertise, said Savage.
Many entrants are joining skilled trades through apprenticeships or structured workforce development programs as contractors attempt to expand capacity without sacrificing safety.
"It's a tremendous opportunity for contractors in that space, but one challenge is that they're having to bring new workers into the industry. Workers' compensation data consistently shows that employees in their first year on the job experience higher injury rates," Savage said.
"(For carriers) it's about working collaboratively with contractors and brokers, alongside our risk engineering teams, to understand which projects require the most skilled labor and where additional loss-control support may be needed. That helps ensure newer workers receive the training they need so they can return home safely each day."
Pressure shifts to schedules, not workmanship
Despite concerns that rapid hiring could affect construction quality, Savage said Zurich has not observed a meaningful increase in casualty litigation or defective workmanship.
"You might logically assume that less experienced workers could result in poorer workmanship, but the industry has done an excellent job with quality assurance and quality control to prevent those issues," he told Insurance Business.
Instead, the labor shortage has manifested primarily through scheduling pressures and project delays. "Simply getting enough workers onto job sites and coordinating labor across multiple projects has become more difficult."
Safety as a retention strategy
One positive development Savage noted is that rather than viewing safety as a compliance exercise, contractors are increasingly treating it as a workforce retention strategy. Leading contractors have developed scheduling models that balance productivity with worker protection.
"These large projects are only adding to those labor constraints," the Zurich specialist said. "The number of workers needed on site is truly remarkable, so coordination, scheduling and planning become critically important to ensure everyone is working safely. And because of the labor shortage, contractors and owners recognize they need to provide safe working environments so skilled workers will want to return to future projects."
Looking beyond traditional workers' compensation
While Savage believes conventional workers' compensation remains fit for purpose, insurers are increasingly looking beyond the policy itself to reduce losses. One overlooked exposure is transportation. "One of the biggest loss drivers in construction is actually auto liability, which also affects workers' compensation," he said. "That's why we're focused on improving driver safety, whether employees are on the clock or not."
Insurers are also deploying new technologies to address behavioral risks before injuries occur. Savage pointed to Zurich's partnership with construction technology firm Aerosite, which analyzes job-site footage to identify unsafe behaviors and near misses.
"We've used this technology successfully across other parts of the construction industry, and now we're deploying it on data center projects, particularly during some of the highest-risk phases of construction," said Savage. "The behavioral feedback has been very valuable in helping workers operate safely."
The emphasis reflects a broader shift toward proactive risk engineering, particularly on projects employing thousands of workers across multiple trades simultaneously.
For Savage, the industry's biggest achievement is that it has largely resisted sacrificing safety in pursuit of unprecedented growth.
"Overall, I think the industry has done a phenomenal job responding to this unprecedented demand while maintaining the right balance between safety and quality," he said. "Contractors and owners have made safety a genuine priority rather than sacrificing it for speed or project completion. That's a real credit to everyone involved."
