Construction: 2021 Pacific Insurance Market Recap Report

In 2021, the Pacific construction insurance market experienced similar challenges to the global construction insurance market, yet there were positive signs that “new” capacity was starting to return to the region. We look at key coverage and underwriting trends, the the influence of ESG concerns, and the outlook for 2022.

A construction worker at construction site

Report summary

Global Construction Market Snapshot

During 2021 we saw signs of rates stabilising for the Construction Insurance sector, but insurer capacity remained tight. Insurance placements remained challenging for projects requiring large limits or with heavy exposure to natural catastrophe risk. Tough insurance market conditions continue to exist for many companies across several regions and challenges remain for single project placements for developers and contractor annual programs. 

Alignment of terms across the major global markets via a greater level of underwriting discipline across the insurer’s portfolio is resulting in increased consistency of pricing and coverage offered. With less authority granted to them, underwriters have struggled to deviate from core ‘traditional’ coverages for construction risks and have struggled through the terms offered to build in and differentiate different risk profiles presented to them by clients. 

Cumulative increases for annual placements began to slow throughout 2021.While many accounts continued to experience minimal increases, insurers continued to focus on the wording restrictions, targeting coverage for infectious disease (driven primarily by COVID clauses), “silent” cyber, customer/suppliers extension triggers and claims preparation costs.   

Coverage for project placements continued to trend upwards but also at a slower rate than has been experienced in the recent past. Projects exposed to natural catastrophe risks have the greatest challenge.

Pacific Region Construction Market

The Pacific region experienced similar challenges to the global construction insurance market, however there were positive signs that “new” capacity was starting to return to the region. We also saw price increases in Contract Works Material Damage flatten significantly towards the later part of 2021. Financial and professional lines also experienced reduced increases across their portfolios. 

All composite lines of insurance (including property and casualty) showed a reduced or flattening trajectory. 

For more detail, including helpful pricing graphs and tables, please download our full report below. 

Construction works (CW) insurance

Insurers continued to look to rectify their book through restrictive terms and conditions against coverage provided previously. Risk differentiation from clients appeared not to be a driving factor in 2021, with a greater internal focus remaining front and centre for insurers. Pleasingly, in the second half of 2021, insurer management began to emphasise that the construction insurance market was “open for business” as opposed to the focus on rate increase and reduced scope of coverage.

For a more detailed analysis of the CW market, please download the full report below.

More in-depth coverage

Download the report below for more in-depth coverage of the above areas, plus an expert look at:

  • Global coverage and underwriting trends and how they are reflected in local markets 
  • Construction liability/casualty market sentiment in 2021
  • The impact of Environmental, Social and Governance (ESG) matters on capacity concerns
  • Key coverage and underwriting trends observed in the construction liability market 
  • The outlook from here and how to navigate your risk transfer successfully in 2022 



2021 Pacific Insurance Market Recap 

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Our Experts

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Maarten van Haaps

Head of Construction, Marsh Specialty, Pacific

LCPA 22/087

Marsh Pty Ltd (ABN 86 004 651 512, AFSL 238983) (“Marsh”) arrange this insurance and is not the insurer. The Discretionary Trust Arrangement is issued by the Trustee, JLT Group Services Pty Ltd (ABN 26 004 485 214, AFSL 417964) (“JGS”). JGS is part of the Marsh group of companies. Any advice in relation to the Discretionary Trust Arrangement is provided by JLT Risk Solutions Pty Ltd (ABN 69 009 098 864, AFSL 226827) which is a related entity of Marsh. The cover provided by the Discretionary Trust Arrangement is subject to the Trustee’s discretion and/or the relevant policy terms, conditions and exclusions. This website contains general information, does not take into account your individual objectives, financial situation or needs and may not suit your personal circumstances. For full details of the terms, conditions and limitations of the covers and before making any decision about whether to acquire a product, refer to the specific policy wordings and/or Product Disclosure Statements available from JLT Risk Solutions on request. Full information can be found in the JLT Risk Solutions Financial Services Guide.”