TWFG Commercial | Houston, TX
The first-quarter economic data is in, and for commercial operators in construction, energy, and maritime, the headline numbers tell only part of the story. The real story lies in what’s shifting beneath the surface and how those changes are poised to impact your insurance costs, your contracts, and your risk exposure over the next 12 months.
Here’s our take.
The Economy Is Still Growing, But the Composition Is Changing
U.S. GDP grew 2.0% in Q1, just under the 2.1% pace recorded across full-year 2025. On the surface, that looks like more of the same. It isn’t.
Consumer spending slowed to 1.6%, with the pullback concentrated in discretionary categories, restaurants, and recreational goods, the things people cut first when they start getting cautious. Healthcare spending continued to lead. And business investment came in strong at 8.7%, driven almost entirely by IT hardware and AI software spend.
What this means for you: Capital is flowing into productivity and automation, not into expansion of physical operations. If you’re a contractor or operator competing for projects, expect clients to scrutinize bids more closely and demand greater proof of efficiency. If you’re investing in AI tools, drones, telematics, or automated equipment, make sure your policy actually covers them. Standard commercial property and inland marine forms were not written with $400K autonomous equipment in mind. We’re seeing coverage gaps on this regularly.
Inflation Jumped, And It’s an Energy Story
CPI rose to 3.3% year-over-year in March, up sharply from 2.4%. Strip out food and energy, and core inflation remained contained. The entire move was energy: that category went from 0.5% to 12.5% inflation in a single print.
What this means for you:
- Construction clients – Diesel, asphalt, and petroleum-based materials (membranes, sealants, plastics, paints) are the first things to reprice. Fixed-price contracts signed six months ago are now eating into margin. Review your builder’s risk limits and your business income worksheets; the replacement cost assumptions baked in last year are likely understated.
- Oil & gas clients – Higher prices are a tailwind on the revenue side, but they pull operator activity up with them. More rigs running, more crews on location, more equipment in the field, and more exposure. If your payroll, receipts, or equipment schedules are growing faster than your policy reflects, you’re underinsured at audit. Don’t wait for the audit invoice to find out.
- All commercial clients – Loss costs follow inflation with a lag. Property and auto physical damage rates have not finished adjusting. Lock in renewals early where it makes sense.
The Labor Market Is Tighter Than the Headline Suggests
178,000 jobs added in March. Unemployment ticked down to 4.3%. Wage growth eased to 3.5%.
The catch: part of that improvement in unemployment reflects the labor force shrinking, retirements accelerating, and immigration slowing. There are fewer available workers, not more jobs being filled.
What this means for you: Workers’ comp exposure isn’t just about rates. It’s about who’s doing the work. Tighter labor markets mean more inexperienced hires, more overtime, and more fatigue-driven claims, particularly in construction and energy, where experience modifiers move quickly. If your ex-mod is creeping up, the fix isn’t shopping the policy. It’s tightening the safety program. We can help you build that case with your underwriter.
Sub-tier risk is also rising. If your subs are using newer crews, your additional insured endorsements and indemnity language matter more than they did 18 months ago. Now is a good time to audit your subcontractor agreements.
Iran, the Strait of Hormuz, and What It Means for Your Marine and Energy Coverage
This is the part most operators are underweighting.
The U.S. and Iran are in an extended ceasefire following a failed first round of talks. The U.S. has imposed a blockade in the Strait of Hormuz. Tehran proposed a three-stage negotiation that was rejected, and critically, under the Iranian framework, Iran retains operational control of the Strait until Stage 2 is resolved. Internally, the IRGC has gained influence in Iranian governance, which historically correlates with a more aggressive posture and prolonged conflicts.
For decades, “Iran could close the Strait” was a theoretical line in a risk report. It is no longer theoretical. Roughly 20% of the world’s oil moves through that chokepoint.
What this means for you:
- Maritime clients — War risk and strikes/riots/civil commotion exclusions are going to be tested. If you have vessels, cargo, or charters with any Gulf exposure, pull your policies and review the war risk clauses, trading warranties, and cancellation provisions. War risk premiums in the region have already moved. We can help you benchmark your position.
- Energy clients — Sustained higher oil prices help your top line, but make your assets more attractive targets physically and in cyber. Critical infrastructure operators are a known target set for state-aligned actors. If your cyber policy still carries sub-limits on business interruption from a cyber event, that’s a conversation worth having now.
- Construction and general commercial clients — Energy inflation feeds through to everything else. Plan your 2026 budgets assuming fuel and materials stay elevated, not that they revert.
What We’re Telling Clients to Do This Quarter
Three concrete moves:
- Reprice your insured values. If your building limits, equipment schedules, and business income worksheets haven’t been updated since 2024, they’re likely off. Coinsurance penalties at the time of a claim are the most costly surprise in commercial insurance. We’ll run a no-cost valuation review.
- Stress-test your contracts. Indemnity language, additional insured requirements, waiver of subrogation, and primary/non-contributory wording are where claims get decided. With labor tightening and sub-tier risk increasing, this matters more than it did last year.
- Get ahead of the renewal. Property, auto, and excess markets are still adjusting to the energy inflation data. Marine and energy markets are repricing Gulf exposure. Coming to your underwriter 90 days early with a clean submission and a documented risk story is worth real dollars.
The macro environment is doing the work of separating well-managed insurance programs from neglected ones. If yours hasn’t been reviewed in the last 12 months, now is the time.
Contact us at TWFG Commercial. We’ll review your program, identify the gaps, and put a plan together for you.
Sameer Khan is the Brand Director of TWFG Khan Insurance, a leading commercial insurance agency in Houston, Texas. With over 20 years of experience, he specializes in risk management solutions for diverse industries, offering tailored insurance programs that ensure protection and peace of mind for businesses and professionals.
