Press Release: REPORT: NY CONSTRUCTION INSURANCE COSTS ARE 200% TO 500% HIGHER THAN OTHER STATESHIDDEN TAX COSTS NY’S ECONOMY BILLIONS, KILLS JOBS, AND STALLS AFFORDABLE HOUSING PROGRESS
Landmark analysis by HR&A Advisors also reveals how NYS insurance law forces builders to waste 6% to 8% of development budgets on premiums that don’t improve safety, and how reform could unlock thousands of new union jobs, fully fund more affordable housing units, while opening billions of dollars for transit and infrastructure projects.
BTEA PRESIDENT CROWLEY: NY's insurance law "isn’t just setting our economy up for failure, it's killing our ability to embrace abundance"
PARTNERSHIP FOR NYC PRESIDENT WYLDE: "we are wasting billions that should be going into housing and infrastructure."
NEW YORK, NY — The Building Trades Employers’ Association (BTEA) today released a first-of-its-kind economic impact report produced by HR&A Advisors that quantifies, for the first time in granular detail, the devastating economic toll of New York’s unique absolute liability standard, known as the “Scaffold Law.” The report reveals that insurance costs in New York are 200% to 500% higher than peer states because of this law, draining billions of dollars from the economy.
The analysis, based on a proprietary deep dive into the books of many of New York’s largest builders, insurers, and public sector institutions confirms that insurance premiums now consume 8% to 10% of total development costs in New York, compared to just 2% to 4% in states like New Jersey, Massachusetts, and Illinois.
Elizabeth Crowley, President and CEO of the BTEA, called the report a critical opportunity for Mayor-Elect Mamdani’s administration to deliver on its housing promise:
“For decades, New York’s insurance law has pushed construction budgets to the brink, forcing developers – and public authorities like the MTA – to waste billions on premiums that don’t make construction work any safer and are a driving force behind the affordability crisis that is crushing our state’s economy.
“When 6% to 8% of every construction dollar spent in New York is wasted on insurance premiums covering absolute liability – an absurd standard no other state in the country relies on – the Scaffold Law isn’t just setting our economy up for failure, it's killing our ability to embrace abundance on everything from affordable housing to new schools and subway lines. Between the Penn Station redevelopment and Phase 2 of the Second Avenue Subway alone, the MTA could save over a billion dollars of taxpayer money through this one simple reform.
“As Mayor-Elect Mamdani prepares to take office, we were highly encouraged to see him target the high cost of insurance as a major culprit behind why building in New York is so expensive, and hope to work with his administration on these reforms, which would reduce the cost of his housing plan by upwards of $8 billion.”
The report draws a direct line between skyrocketing insurance costs and the loss of union jobs. Government data also clearly shows that New York construction workers are no safer than in neighboring states with a comparative liability standard. In 2023, New York City’s construction fatality rate of 11.6 per 100,000 workers, and New York State’s rate of 10.4, significantly exceeded the national average of 9.6.
Said Kate Wittels, Partner at HR&A Advisors, “When we compared real project costs in New York against peer states, we found that New York’s insurance costs are multiples higher, making it significantly more expensive to build here. If New York were to adopt a comparative negligence standard in line with the rest of the country, it would allow the state to unlock a 1.4x economic multiplier, generating hundreds of millions in new economic output and thousands of jobs from capital that is currently being spent on construction insurance.”
REAL WORLD STAKES:
The report models exactly what the wasted insurance spending means for New York’s most critical active projects. If the law were reformed, the savings would be massive:
Penn Station Redevelopment: Could save up to $560 million, enough to support up to 1,500 new jobs and $300 million in wages.
2nd Ave Subway Phase 2: Could save up to $550 million, generating over $710 million in new economic activity.
A Bronx Affordable Housing Development: Wasted premiums alone cost $15 million to $30 million, money that could have funded up to 40 additional affordable homes.
NYC School Construction Authority (SCA): Analyzing the 2020-2023 spend, the SCA could have saved $210 million – $420 million, funds that could have built new schools or renovated existing classrooms.
The report also highlights that the burden falls disproportionately on subcontractors – especially those in concrete, painting, and scaffolding – where insurance premiums can devour 20% to 25% of total revenue.
“This report validates exactly what our members experience every day: New York’s Scaffold Law drives insurance premiums to levels unheard of in any other state,” said Felice Farber, Executive Director Subcontractors Trade Association. “These skyrocketing costs strain the bottom line for union subcontractors, especially smaller firms and MWBEs that have the least ability to absorb them. The data confirm what the industry has long known: this law imposes massive financial burdens without delivering any measurable improvement in worker safety. Real reform is essential to keep New York’s construction market fair, competitive, and most importantly, safe.”
“New York is the most expensive city in America, and the sky-high cost of construction insurance is a major contributor. This report lays bare the economic reality: we are wasting billions that should be going into housing and infrastructure. The Partnership supports reform efforts that promise to impose needed fiscal discipline and comparative negligence standards while keeping worker safety at the forefront,” said Kathryn Wylde, President and CEO, Partnership for New York City.
"Rising insurance costs are a direct threat to housing affordability in New York. This report makes the case for reforming the Scaffold Law, which is directly undermining New York City’s ability to build the affordable housing we desperately need,” said Rachel Fee, Executive Director of the New York Housing Conference.
Peter Davoren, CEO of Turner Construction said, “New York’s construction insurance premiums are two to five times higher than in comparable states. This adds significant cost to construction and places a significant burden on small and emerging contractors. Reducing these costs would encourage investment in projects that create jobs, expand affordable housing, and strengthen New York’s economic vitality. Adopting a comparative negligence standard—while maintaining rigorous safety practices—would lower costs, improve market conditions for local firms, and enhance New York City’s overall competitiveness.”
ABOUT THE REPORT
The report, The Economic Impact of the Scaffold Law, was prepared by HR&A Advisors for the BTEA. It utilizes 32 data sets from leading real estate developers, general contractors, and public agencies – including Turner Construction, Gilbane, Suffolk Construction, Metropolitan Transportation Authority (MTA), Vornado, Rockrose, and the NYC School Construction Authority (SCA) – to model the economic benefits of shifting New York to a comparative negligence standard.
ABOUT THE BTEA
The Building Trades Employers’ Association (BTEA) is the construction industry's unified advocate for construction safety, professional development, and government affairs. The BTEA represents 24 contractor associations and over 1,200 union construction managers, general contractors, and specialty trades subcontractors across New York. Our members employ over 130,000 union tradespeople and are responsible for more than $65 billion in annual construction revenue.
ABOUT HR&A
HR&A Advisors, Inc. (HR&A) is an employee-owned company advising visionary clients on how to create vital places, build equitable and resilient communities, and improve people’s lives. Learn more at www.hraadvisors.com.
###