Construction Insurance Market Update
The construction insurance market is in a state of transition from a market that has seen generally stable or declining pricing for over a decade to one in which prices are generally rising. This is being driven by:
- Changing market appetite towards shorter term risks.
- Reduction in available capacity from specialist construction insurers.
- Limited desire to chase market share despite rising prices.
- Series of losses impacting profitability.
- Underwriters returning to technical rating models.
The construction market started transitioning in late 2018 with 2020 being the second consecutive year of increased terms and conditions.
The London market continues its focus on both domestic and international risks. Whilst capacity has been restricted, all but the largest of risks will attract multiple lead quotes. Whereas the terms and conditions would have looked very homogeneous in the softer market, the spread of both pricing and coverage has grown significantly leading to some large, complex project placements being placed on split differential terms in extreme cases.
Domestic appetite for annual business remains very strong, whereas appetite for international business continues to be focused much more on one-off single projects, often driven by a need to monitor global risk accumulations across their entire portfolios.
Below Alistair Urquhart (Global Head of Construction Placement) provides an overview of the insurance market conditions which are being faced by the construction industry globally, how he expects them to change and what clients can do to minimize the effect of the changing market.